Scandinavian Working Papers in Economics

Research Papers in Economics,
Stockholm University, Department of Economics

No 2014:3: Public Order and Private Payments: Paying for Police Services at Events

Sten Nyberg () and Mikael Priks ()
Additional contact information
Sten Nyberg: Dept. of Economics, Stockholm University, Postal: Department of Economics, Stockholm University, S-106 91 Stockholm, Sweden
Mikael Priks: Dept. of Economics, Stockholm University, Postal: Department of Economics, Stockholm University, S-106 91 Stockholm, Sweden

Abstract: Should organizers of events, such as sport games or concerts, share the costs of maintaining public order in connection to the events? This question has been hotly debated in many countries, especially in connection to soccer hooliganism. Critics argue that organizers should do more to combat unruly behavior, which has significant external effects. The incentive to do so may be muted by the possibility of free riding on the police. We model how co-payments can address the under-provision of security on the part of organizers. However, it has been claimed that co-payments can backfire and lead financially constrained organizers to instead provide less, not more, security. We analyze under which circumstances this may be true. Finally, we exploit a natural experiment from the Swedish soccer league where police payments were introduced for some clubs only. The results are in line with the implications of the model.

Keywords: Public order; private security; public events; co-payments for police; free-riding; externality; hooliganism; natural experiment

JEL-codes: H23; H49; K42; L83

28 pages, April 10, 2014

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wp14_03.pdf PDF-file 

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