Payment Evasion

Item Type Journal paper
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.

Authors Bühler, Stefan; Halbheer, Daniel & Lechner, Michael
Journal or Publication Title The journal of industrial economics
Language English
Keywords Payment Evasion; Pricing; Fine; Self-Selection
Subjects economics
HSG Classification contribution to scientific community
HSG Profile Area SEPS - Economic Policy
Refereed Yes
Date 18 December 2017
Publisher Wiley-Blackwell
Place of Publication Oxford
Series Name Economics Working Paper Series from University of St. Gallen, School of Economics and Political Science
Volume 65
Number 4
Page Range 804-832
Number of Pages 29
ISSN 0022-1821
ISSN-Digital 1467-6451
Publisher DOI 10.1111/joie.12144
Official URL http://onlinelibrary.wiley.com/doi/10.1111/joie.12...
Depositing User Prof. Dr. Stefan Bühler
Date Deposited 24 Nov 2014 14:38
Last Modified 06 Jul 2018 10:40
URI: https://www.alexandria.unisg.ch/publications/237130

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Citation

Bühler, Stefan; Halbheer, Daniel & Lechner, Michael (2017) Payment Evasion. The journal of industrial economics, 65 (4). 804-832. ISSN 0022-1821

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https://www.alexandria.unisg.ch/id/eprint/237130
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