Cops and Donuts

 During the Gruber reading he talks about externalities focusing on the polluted streams example though he makes reference to others. One in particular that I found interesting was the example of the donut shop and the neighborhood. In this example the  cost of police protection wasn’t factored in donut cost. I found it interesting because I’ve heard that reference before but didn’t know the origin so I decided to look further into it. 

The cops and donuts stereotype began in the 40s. Donut shops were the only stores open all night so policemen would often eat there. Since donut shops were the only ones open late this made them susceptible to theft and other crimes. This made for a symbiotic relationship as security was expensive and policemen were able to enjoy a quick snack. However this is also an example of a positive consumer externality because the policemen provided protection without receiving any added benefits.