LoJack is small, hidden radio-transmitter device, embedded inside cars, and that can be activated after your car is stolen and therefore used to track down stolen vehicles. As Ian Ayres and Steve Levitt showed, LoJack's utility lies in the large extent of positive externality it delivers. Uncertain about whether the car they are stealing contains LoJack, car thieves become wary, thereby reducing such crimes and also protecting cars without LoJack.
The concept behind LoJack can be used to protect any valuable good from theft. As Freakonomics writes, The University of Washington has just released a free program, Adeona, that will track your laptop if it’s stolen. If the program is installed on a computer with a built-in camera, it will even send you a photo of the thief at the keyboard.
Given the large positive externalities associated with them, LoJack type tracking systems, will be under supplied by the market. It is therefore appropriate for governments to incentivize the erection of such systems.
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