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Payment Evasion
Journal
The journal of industrial economics
Series
Economics Working Paper Series from University of St. Gallen, School of Economics and Political Science
ISSN
0022-1821
ISSN-Digital
1467-6451
Type
journal article
Date Issued
2017-12-18
Author(s)
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.
Language
English
Keywords
Payment Evasion
Pricing
Fine
Self-Selection
HSG Classification
contribution to scientific community
HSG Profile Area
SEPS - Economic Policy
Refereed
Yes
Publisher
Wiley-Blackwell
Publisher place
Oxford
Volume
65
Number
4
Start page
804
End page
832
Pages
29
Subject(s)
Eprints ID
237130