On the Public Economics of Casino Gambling
This paper studies casino-style gambling from the public economics point of view in a jurisdiction populated by oligopolistically competitive legal casinos. We consider three different regimes: laissez-faire, entry regulation and tax regulation. The model highlights three important external effects from casino-style gambling: non-casino income creation, social disorder costs, and casino exporting to other jurisdictions. In the generalized case with an endogenously-determined ratio of local to total gamblers, we allow the configuration of casinos to be centralized or jurisdiction-wide dispersed. A complete comparison between equilibrium and command optimum outcomes is provided, and the welfare consequences under the three regimes and two casino configurations are examined.
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Web page: http://www.econ.sinica.edu.tw/index.php?foreLang=en
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- Earl L. Grinols & David B. Mustard, 2001. "Management and information issues for industries with externalities: the case of casino gambling," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 22(1-3), pages 1-3.
- N. Gregory Mankiw & Michael D. Whinston, 1986. "Free Entry and Social Inefficiency," RAND Journal of Economics, The RAND Corporation, vol. 17(1), pages 48-58, Spring.
- Ricardo C. Gazel & Dan S. Rickman & William N. Thompson, 2001. "Casino gambling and crime: a panel study of Wisconsin counties," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 22(1-3), pages 65-75.
- Gary S. Becker, 1983. "A Theory of Competition Among Pressure Groups for Political Influence," The Quarterly Journal of Economics, Oxford University Press, vol. 98(3), pages 371-400.
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