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Presentation to Mayor: Campaign to Reduce Illegal Guns in Chicago

Presentation to Mayor: Campaign to Reduce Illegal Guns in Chicago. Hari Vasu-Devan and Homer Simpson November 2011. There is a large market for illegal guns in Chicago. More than 40% of guns possessed were obtained illegally

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Presentation to Mayor: Campaign to Reduce Illegal Guns in Chicago

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  1. Presentation to Mayor:Campaign to Reduce Illegal Guns in Chicago Hari Vasu-Devan and Homer Simpson November 2011

  2. There is a large market for illegal guns in Chicago. More than 40% of guns possessed were obtained illegally • Illegal guns are often used in shootings and are a major contributor to neighborhood violence in Chicago Product Market: Illegal Guns

  3. This PSA, provided by Cease Fire organization*, is intended to affect the market for illegal guns in Chicago and is targeted at young people involved in violence in communities • We hope that this stop-the-violence advertisement campaign will reduce the amount of gang violence in Chicago. • If there is less gang violence in Chicago, there will be less demand for illegal guns, ceteris paribus (or all else equal) • This will cause a shift to the left of the demand curve as there will be less demand at all price levels Advertisement Campaign * You have to make your own advertisement

  4. Currently, the market for illegal handguns is fairly inelastic, with elasticity of demand less than 0.37 at all price points • The market for guns is inelastic because there are not many substitutes for illegal guns, so people are willing to buy them at almost any price • People are willing to pay between $100 and $600 for a gun Existing Demand for Hand Guns Note: Information is fabricated

  5. Substitutes • Three substitutes for illegal guns are alarm systems, jobs and Xbox. If guns are purchased for protection, an alarm system could be an effective substitute. If the price of getting a job goes down (more jobs are available), there might be less demand for guns as people are working instead of buying guns for illegal business. So, jobs are a substitute for illegal guns. If the price of Xbox goes down, there might be less demand for guns since people are playing more video games. So, Xbox is a substitute for illegal guns. • Complements • Three complements for illegal guns are knives, bullets and legal services. If demand for knives and bullets rise, then it is likely that the demand for guns will also increase since you need bullets for guns and people using illegal guns also use knives. It is likely that people using illegal guns will get arrested, so demand for legal services will rise when more people demand illegal guns. Existing Demand for Hand Guns

  6. Law of Demand • The substitution effect results when the price rise in illegal guns cause people to demand substitutes instead of illegal guns. A rise in the price of guns could cause more people take the money they would have used to buy guns and instead buy an Xbox video game systems, thus reducing the demand for illegal guns. • The income effect results when the price rise in illegal guns causes a real decline in income for the gun buyer and thus less demand as they can now afford less guns. Existing Demand for Hand Guns

  7. Since demand is fairly inelastic, trying to raise the price of illegal guns will not decrease demand • Effective stop-the-violence advertising, combined with peace marches and job/education opportunities should shift the demand curve to the left • This shift will reduce demand for illegal guns at all price levels, ceteris paribus Shifted Demand for Hand Guns DEMAND CURVE SHIFTS LEFT Note: Information is fabricated

  8. More than 80% of homicides in Chicago are caused by gunshot.* • More than 40% of possessed guns were obtained illegally • The demand for illegal guns is inelastic, so attempts to raise prices for guns and lower quantity demanded will be ineffective • Stop-the-violence advertisements in the community, targeted at young people involved in violence, are intended to lower demand for illegal guns by motivating young people to get involved in positive things and stay away from the streets. • If the advertisement campaign works, demand for illegal guns should shift to the left, as quantity demanded will decrease at all price levels since young people are participating in less violence. • * RedEye Homicide Tracker Conclusion

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