Old police guns have been recycled into the consumer market ever since the early 1980s. It all started when Smith & Wesson, a leader in law enforcement sales, was looking to sell a new revolver. In order to entice the police departments to upgrade their guns, S & W arranged for wholesalers to bid on the arsenal of old police guns in an informal auction. The proceeds from the auction were used to offset the cost of replacement.

The practice gained popularity in the early 90s with the introduction of semiautomatic pistols. Since then, gun companies have used this tactic to sell newer, more powerful weapons to police departments. The result: With more and more departments joining the act, used police guns were flooding the consumer market. In effect, criminals now had a cheaper and more abundant supply of used guns.

Thousands of old police guns turn up in crimes each year. The crimes traced by the federal Bureau of Alcohol, Tobacco and Firearms revealed that at least 1,100 former police guns were among the 193,203 crime guns traced in 1998. Considering the inconsistencies in compiling the gun-trace data, this probably represents only the tip of the iceberg.

So should this practice be banned altogether? Before jumping to any conclusions, consider this: The U.S. unit of Italy's Beretta SpA offered to sell the St. Louis Metropolitan Department a brand-new 9 mm pistol for each of its 1,611 officers for a total of $178,000, if it traded in its 10-year-old models. Destroying the old pistols and buying new Berettas outright would cost the department $678,000. Thus, by trading in their old guns, police departments not only cut down on the replacement costs, but also save on the cost of destroying used guns. Some departments (like Lakewood in Jefferson County) have even been earning revenues (up to $8000 a year) by trading in used guns.

But, unlike recycling paper and aluminum cans, which can generate positive externalities by reducing garbage and energy use, recycling guns generates negative externalities by placing cheaper guns in the hands of potential criminals. In other words, recycling guns could decrease private costs (for the police departments) only by increasing social costs (from higher crimes).

So, with gun-crimes on the increase, several cities have joined the calls from the U.S. Conference of Mayors and the International Association of Chiefs of Police to ban the sale of used police guns. If some 28 municipalities have seen fit to sue the gun industry for flooding the market with handguns, it is hardly appropriate for their police departments to contribute to the proliferation of guns.