Payment Evasion
This paper models payment evasion as a source of profit by letting the firm choose the purchase price and the fine imposed on detected payment evaders. For a given price and fine, the consumers purchase, evade payment, or choose the outside option. We show that payment evasion leads to a form of second-degree price discrimination in which the purchase price exceeds the expected fine faced by payment evaders. We also show that higher fines do not necessarily reduce payment evasion. Using data on fare dodging on public transportation, we quantify expected fines and payment evasion.
Year of publication: |
2015
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Authors: | Buehler, Stefan ; Halbheer, Daniel ; Lechner, Michael |
Publisher: |
Munich : Center for Economic Studies and ifo Institute (CESifo) |
Subject: | pricing | fine | price discrimination | deterrence |
Saved in:
freely available
Series: | CESifo Working Paper ; 5342 |
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Type of publication: | Book / Working Paper |
Type of publication (narrower categories): | Working Paper |
Language: | English |
Other identifiers: | 825512042 [GVK] hdl:10419/110837 [Handle] RePec:ces:ceswps:_5342 [RePEc] |
Classification: | L12 - Monopoly; Monopolization Strategies |
Source: |
Persistent link: https://www.econbiz.de/10010531812