There is very little incentive for individual owners to prevent auto theft, since most of the costs are in the form of insurance premiums and government expenditures rather than in the form of losses to individuals. Auto insurance policies usually package the theft element of insurance along with fire, personal liability, and accident provisions. According to industry estimates, about 85 percent of all vehicles are insured. Vehicle protection measures include both built-in and add-on security. Victims of auto theft experience costs associated with the time taken to deal with the crime and temporary vehicle loss, and psychological costs of the victimization experience. Offenders also incur costs, including the risk of apprehension and punishment and opportunity costs associated with time, effort, and skill. Auto theft has two basic effects on the vehicle market: persons whose cars are stolen commonly replace them with new or used vehicles; and stolen vehicles re-enter the legitimate market as second-hand vehicles. Costs of auto theft are aggregated, and incentives for and the cost-effectiveness of auto theft prevention are discussed. The author concludes that government-mandated standards of design security should be applied to all autos, since the private market cannot provide an optimum level of theft security. 25 references, 1 note, and 1 table