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Casino regulations and economic welfare

Author

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  • Juin-Jen Chang
  • Ching-Chong Lai
  • Ping Wang

Abstract

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.

Suggested Citation

  • Juin-Jen Chang & Ching-Chong Lai & Ping Wang, 2010. "Casino regulations and economic welfare," Canadian Journal of Economics, Canadian Economics Association, vol. 43(3), pages 1058-1085, August.
    • Handle: RePEc:cje:issued:v:43:y:2010:i:3:p:1058-1085
    DOI: 10.1111/j.1540-5982.2010.01606.x
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    Cited by:

    1. Melisa Bubonya & David P. Byrne, 2020. "Supplying Slot Machines to the Poor," Southern Economic Journal, John Wiley & Sons, vol. 86(3), pages 1081-1109, January.
    2. Chang, Juin-Jen & Fiedler, Ingo & Lai, Ching-Chong & Wang, Ping, 2021. "Cross-border casino competition, Externalities and Optimal Tax Policy: A Unified Theory with Quantitative Analysis," Regional Science and Urban Economics, Elsevier, vol. 88(C).
    3. Laszlo Goerke, 2022. "Partisan competition authorities, Cournot‐oligopoly, and endogenous market structure," Southern Economic Journal, John Wiley & Sons, vol. 89(1), pages 238-270, July.
    4. Lou, Loretta, 2021. "Casino capitalism in the era of COVID-19: examining Macau’s pandemic response," LSE Research Online Documents on Economics 111026, London School of Economics and Political Science, LSE Library.
    5. Brad R. Humphreys & Jane E. Ruseski, "undated". "Legalized Sports Betting and Mental Health," Working Papers 24-04, Department of Economics, West Virginia University.
    6. Humphreys, Brad R. & Marchand, Joseph, 2013. "New casinos and local labor markets: Evidence from Canada," Labour Economics, Elsevier, vol. 24(C), pages 151-160.
    7. Laszlo Goerke, 2022. "Endogenous Market Structure and Partisan Competition Authorities," IAAEU Discussion Papers 202201, Institute of Labour Law and Industrial Relations in the European Union (IAAEU).
    8. Brad R. Humphreys & John A. Nyman & Jane E. Ruseski, 2021. "The Effect of Recreational Gambling on Health and Well-Being," Eastern Economic Journal, Palgrave Macmillan;Eastern Economic Association, vol. 47(1), pages 29-75, January.
    9. Juin-Jen Chang & Ching-Chong Lai & Ping Wang, 2017. "A Tale of Two Cities: Cross-Border Casino Competition Between Detroit and Windsor," NBER Working Papers 23969, National Bureau of Economic Research, Inc.

    More about this item

    JEL classification:

    • H2 - Public Economics - - Taxation, Subsidies, and Revenue
    • D62 - Microeconomics - - Welfare Economics - - - Externalities
    • D21 - Microeconomics - - Production and Organizations - - - Firm Behavior: Theory

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