If security is left to the independent decisions of stores

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Three stores havea problem with theft, and security is a public good. Let’s use S to stand for the number of person-hours of security patrols per week. The marginal benefit of security patrols to each of the stores is given by the formula MB = 100–2S, and the cost of patrols is $30 per hour. What is the socially efficient level of security? If security is left to the independent decisions of the stores, what will they choose? How would your answer change ifthere were 5 stores?

Reference no: EM131112327

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