Casino regulations and economic welfare
This paper studies the entry and tax regulation of oligopolistically competitive privately run casinos and government-run casinos in a jurisdiction. We highlight three important external effects from casino-style gambling: non-casino income creation, social disorder costs, and cross-border gambling. The laissez-faire equilibrium need not be overcrowding compared with regulated or government-run regimes. Entry regulation may lead to higher jurisdiction welfare than tax regulation. Government-run casinos always operate on a larger scale and achieve higher welfare than other regimes, given the same number of casinos. With an endogenous fraction of external gamblers, a dispersed casino configuration yields higher welfare than a centralized one.
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Volume (Year): 43 (2010)
Issue (Month): 3 (August)
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