Download This PaperPayment Evasion
29 Pages Posted: 20 Dec 2017
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Payment Evasion
Journal of Industrial Economics, 65(4), 804-832
Number of pages: 31
Posted: 20 Nov 2014
Last Revised: 25 Mar 2020
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Payment Evasion
The Journal of Industrial Economics, Vol. 65, Issue 4, pp. 804-832, 2017
Number of pages: 29
Posted: 20 Dec 2017
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Date Written: December 2017
Abstract
This paper shows that a firm can use the purchase price and the fine imposed on detected payment evaders to discriminate between unobservable consumer types. Assuming that consumers self‐select into regular buyers and payment evaders, we show that the firm typically engages in second‐degree price discrimination in which the purchase price exceeds the expected fine. In addition, we find that higher fines do not necessarily reduce payment evasion. We illustrate with data from fare dodging on public transportation.
Suggested Citation: Suggested Citation
Buehler, Stefan and Halbheer, Daniel and Lechner, Michael, Payment Evasion (December 2017). The Journal of Industrial Economics, Vol. 65, Issue 4, pp. 804-832, 2017, Available at SSRN: https://ssrn.com/abstract=3090067 or http://dx.doi.org/10.1111/joie.12144
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