Prosecution Associations in Industrial Revolution England: Private Providers of Public Goods?

In early nineteenth-century England, there was no professional police force and most prosecutions were private. This paper examines how associations for the prosecution of felons arose to internalize the positive externalities produced by private prosecutions. Drawing upon new historical evidence, it examines how the internal governance and incentive structures of prosecution associations enabled them to provide public goods. Consistent with the reasoning of Demsetz (1970), I find that prosecution associations were economic clubs that bundled the private good of insurance with the public good of deterrence. Associations used local newspapers to advertise rewards and attract new members. Price discrimination was employed in order to elicit contributions from individuals with different security demands. Selective incentives helped to overcome free-rider problems between members. [A]n Association for the more effectual bringing to Justice every Offender who shall hereafter be guilty of felony against the person or property of any of the Associators, will not only be the most likely method to preserve the persons and properties of said Associator safe from felony, but will at the same time conduce greatly to the Public Good. [Association for the Prosecution of Felons 1799, p. 3] MARK KOYAMA is an assistant professor in the Department of Economics at George Mason University. This work has benefited from the comments of seminar audiences at the University of York and at the annual conference of the International Society for New Institutional Economics at Stanford University. I am grateful to Jonathan Koyama, David Friedman, and Pete Leeson for reading earlier drafts; to Samuel Bray and Matteo Pazzona for helpful suggestions; to Jane Perry for her careful proofreading; and to Stephen Davies for getting me interested in the topic in the first place. The paper also benefited from insightful comments from the editor of this journal and an anonymous referee. I would like to thank archivists in Cambridge, Doncaster, London, Sheffield, and York for their assistance. This content downloaded from 129.174.55.63 on Fri, 4 Apr 2014 14:13:51 PM All use subject to JSTOR Terms and Conditions 96 / T H E J O U R N A L O F L E G A L S T U D I E S / V O L U M E 4 1 ( 1 ) / J A N U A R Y 2 0 1 2