Who Commits Fraud? Evidence From Korean Gas Stations

36 Pages Posted: 27 Mar 2020 Last revised: 16 Apr 2020

See all articles by Christian Ahlin

Christian Ahlin

Vanderbilt University - College of Arts and Science - Department of Economics

In Kyung Kim

Nazarbayev University

Kyoo il Kim

Michigan State University - Department of Economics

Date Written: March 4, 2020

Abstract

In this article, we study under what circumstances a gas station is more likely to commit fuel fraud. Using a new and hitherto unexploited list of fuel fraud detections, we find evidence that stations under less favorable economic conditions -- more competitors, lower retail fuel price, or higher operating costs -- engage in fraudulent activity more often, while the reputational incentives for product credibility is stronger for chain stations than independent ones. Also, fuel fraud tends to cluster among nearby stations, suggesting that illicit activity may be propagated from one station to others nearby. As for pricing behavior, in general gas stations seem to keep price constant and take higher price-cost margins when selling adulterated fuel, suggesting that consumers are harmed by this kind of fraud.

Keywords: fuel fraud, fuel price, gas station

JEL Classification: K42, L13, L81

Suggested Citation

Ahlin, Christian and Kim, In Kyung and Kim, Kyoo il, Who Commits Fraud? Evidence From Korean Gas Stations (March 4, 2020). Available at SSRN: https://ssrn.com/abstract=3548326 or http://dx.doi.org/10.2139/ssrn.3548326

Christian Ahlin

Vanderbilt University - College of Arts and Science - Department of Economics ( email )

Box 1819 Station B
Nashville, TN 37235
United States
(615) 322-2482 (Phone)
(615) 343-8495 (Fax)

HOME PAGE: http://people.vanderbilt.edu/~c.ahlin/cv.pdf

In Kyung Kim (Contact Author)

Nazarbayev University ( email )

53 Kabanbay Batyra Avenue
Astana, 010000
Kazakhstan

Kyoo il Kim

Michigan State University - Department of Economics ( email )

East Lansing, MI 48824
United States

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