Question

3. Public Policy Analysis The Washington, D.C., police bought more than 6,000 guns, no questions asked, in gun buyback programs in 1999 and 2000. Millions of dollars have been spent in similar programs in many cities including NYC. The theory of gun buybacks is that: buybacks reduce guns in circulation and fewer guns in circulation reduce crime. Do gun buyback programs make good policies? (Hints: What condition of guns are likely to be offered at buybacks? What might be the elasticity of S? What are the S and D curves initially and with buyback programs? What happens to P and Q initially and with buyback programs?)

Answer 1

Buyback programme of guns would essentially mean buying back the guns which are already in circulation. This means that the supply reduces and the demand increases. Also, the elasticity of supply would be higher meaning as prices change, the supply would change by a larger amount. This combination of supply and demand would lead to a decrease in qunatity of guns but a greater increase in prices because of decreasing supply and increasing demand. The increasing prices can also lead to the problem of adverse selection creating problems to identify the good gun from the bad gun. Hence, the policy would have its pros and cons