TO TEST FOR SPILLOVERS, A THEORETICAL AND EMPIRICAL MODEL WAS DEVELOPED. OTHER ISSUES EXAMINED IN THE STUDY WERE THE EFFECTIVENESS OF DIFFERENT PUBLIC POLICIES IN DETERRING CRIME AND THE EFFECT OF CRIME RATES ON EQUILIBRIUM POLICE EXPENDITURES. A REVIEW OF THE LITERATURE IS PRESENTED WHICH GENERALLY INDICATES THAT INCREASING POLICE EXPENDITURES IS NOT AN EFFECTIVE METHOD FOR DETERRING CRIME. THE STRATIFIED MODEL UTILIZED BY THIS STUDY IS A SIMULTANEOUS CRIME SUPPLY-POLICE EXPENDITURE SYSTEM THAT GIVES SPECIAL ATTENTION TO CENTRAL CITY-SUBURBAN RING INTERACTIONS. IT WAS FOUND THAT THE EFFECT OF POLICE EXPENDITURES ON CRIME RATES WAS NOT LARGE, AND IN GENERAL; DID NOT REACH TRADITIONAL SIGNIFICANCE LEVELS. EXAMINING SPILLOVER COEFFICIENTS, IT WAS FOUND THAT AS CENTRAL CITIES INCREASED THEIR EXPENDITURES, SUBURBAN RING CRIME RATES FELL. LIKEWISE, AS SUBURBS INCREASED THEIR EXPENDITURES, CENTRAL CITY CRIME RATES FELL. IT IS CONCLUDED THAT SPILLOVERS MAY CAUSE DISTORTIONS IN ECONOMIC EFFICIENCY. CONSOLIDATION OF URBAN POLICE SERVICES, HOWEVER, IS PROBABLY NOT WARRANTED. IT IS RECOMMENDED THAT CRIME DETERRENCE POLICIES FOCUS ON INCREASING PRISON SENTENCE TIME THAT ACTUALLY IS SERVED, RATHER THAN INCREASING POLICE EXPENDITURES. A BIBLIOGRAPHY AND THE EQUATION SYSTEMS ARE APPENDED. (AUTHOR ABSTRACT MODIFIED--MLC)