FIRST, IT INCORPORATES IN THE CONCEPT OF OPPORTUNITIES BOTH PUNISHMENT AND REWARD- COSTS AND GAINS FROM LEGITIMATE AND ILLEGITIMATE PURSUITS-RATHER THAN THE COST OF PUNISHMENT ALONE, AND ATTEMPTS TO IDENTIFY AND TEST THE EFFECT OF THEIR EMPIRICAL COUNTERPARTS. SPECIFICALLY, IT PREDICTS AND VERIFIES EMPIRICALLY A SYSTEMATIC ASSOCIATION BETWEEN THE RATE OF SPECIFIC CRIMES ON THE ONE HAND, AND INCOME INEQUALITY AS WELL AS LAW ENFORCEMENT ACTIVITY ON THE OTHER. SECOND, IT LINKS FORMALLY THE THEORY OF PARTICIPATION IN ILLEGITIMATE ACTIVITIES WITH THE GENERAL THEORY OF OCCUPATIONAL CHOICES BY PRESENTING THE OFFENDER'S DECISION PROBLEM AS ONE OF AN OPTIMAL ALLOCATION OF RESOURCES UNDER UNCERTAINTY TO COMPETING ACTIVITIES BOTH INSIDE AND OUTSIDE THE MARKET SECTOR, RATHER THAN AS A CHOICE BETWEEN MUTUALLY EXCLUSIVE ACTIVITIES. THE MODEL DEVELOPED CAN BE USED TO PREDICT NOT ONLY THE DIRECTION, BUT ALSO THE RELATIVE MAGNITUDE OF THE RESPONSE OF SPECIFIC OFFENDERS TO CHANGES IN VARIOUS OBSERVABLE OPPORTUNITIES. IN ADDITION, THE ANALYSIS DISTINGUISHES BETWEEN THE DETERRENT AND PREVENTIVE EFFECTS OF PUNISHMENT BY IMPRISONMENT ON THE RATE OF CRIME (BY THE LATTER IS MEANT THE REDUCTION IN CRIMINAL ACTIVITY DUE TO THE TEMPORARY SEPARATION OF IMPRISONED OFFENDERS FROM POTENTIAL VICTIMS) AND ENABLES AN EMPIRICAL VERIFICATION OF THE FORMER EFFECT ALONE. FINALLY, IN THE CONTEXT OF THE EMPIRICAL IMPLEMENTATION, AN ANALYSIS OF THE INTERACTION BETWEEN CRIME AND LAW ENFORCEMENT ACTIVITY THROUGH POLICE AND COURTS IS PRESENTED AND A SIMULTANEOUS-EQUATION ECONOMETRIC MODEL IS EMPLOYED IN ESTIMATING SUPPLY-OF-OFFENSES FUNCTIONS AND A PRODUCTION FUNCTION OF LAW ENFORCEMENT ACTIVITY. THE RESULTS OF THE EMPIRICAL INVESTIGATION ARE THEN USED TO PROVIDE SOME TENTATIVE ESTIMATES OF THE EFFECTIVENESS OF LAW ENFORCEMENT IN DETERRING CRIME AND REDUCING THE SOCIAL LOSS FROM CRIME. (AUTHOR ABSTRACT)