I really like this framing of the market as a subsidization!
To your confusion, both outcomes are indeed subsidized -- the observed asymmetry comes from the fact that the theft outcome is subsidized more than the non-theft outcome. This is due to the fact that the return on the "rack stolen" credit is a 100x profit whereas the "rack not stolen" credit is only a 1.01x profit.
If instead the "not stolen" credit cost $0.01 with a similar credit supply you would expect to see people buying "not stolen" credits and then not just deciding not to steal the rack but instead proactively preventing it from being stolen by actually bolting it down, or... (read more)
I really like this framing of the market as a subsidization!
To your confusion, both outcomes are indeed subsidized -- the observed asymmetry comes from the fact that the theft outcome is subsidized more than the non-theft outcome. This is due to the fact that the return on the "rack stolen" credit is a 100x profit whereas the "rack not stolen" credit is only a 1.01x profit.
If instead the "not stolen" credit cost $0.01 with a similar credit supply you would expect to see people buying "not stolen" credits and then not just deciding not to steal the rack but instead proactively preventing it from being stolen by actually bolting it down, or... (read more)