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Payment Evasion

Listed author(s):
  • Buehler, Stefan

    ()

  • Halbheer, Daniel

    ()

  • Lechner, Michael

    ()

This paper models payment evasion as a source of profit by letting the firm choose the price charged to paying consumers and the fine collected from detected payment evaders. The consumers choose whether to purchase, evade payment, or refrain from consumption. We show that payment evasion allows the firm to charge a higher price to paying consumers and to generate a higher profit. We also show that higher fines do not necessarily reduce payment evasion. Finally, we provide empirical evidence which is consistent with our theoretical analysis, using comprehensive micro data on fare dodging on the Zurich Transport Network.

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File URL: http://ux-tauri.unisg.ch/RePEc/usg/econwp/EWP-1435.pdf
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Paper provided by University of St. Gallen, School of Economics and Political Science in its series Economics Working Paper Series with number 1435.

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Length: 34 pages
Date of creation: Nov 2014
Handle: RePEc:usg:econwp:2014:35
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  1. Rob, Rafael & Waldfogel, Joel, 2006. "Piracy on the High C's: Music Downloading, Sales Displacement, and Social Welfare in a Sample of College Students," Journal of Law and Economics, University of Chicago Press, vol. 49(1), pages 29-62, April.
  2. Hirshleifer,Jack & Glazer,Amihai & Hirshleifer,David, 2005. "Price Theory and Applications," Cambridge Books, Cambridge University Press, number 9780521523424, October.
  3. Novos, Ian E & Waldman, Michael, 1984. "The Effects of Increased Copyright Protection: An Analytic Approach," Journal of Political Economy, University of Chicago Press, vol. 92(2), pages 236-246, April.
  4. Cox, Dena & Cox, Anthony D & Moschis, George P, 1990. " When Consumer Behavior Goes Bad: An Investigation of Adolescent Shoplifting," Journal of Consumer Research, Oxford University Press, vol. 17(2), pages 149-159, September.
  5. Peukert, Christian & Claussen, Jörg & Kretschmer, Tobias, 2013. "Piracy and Movie Revenues: Evidence from Megaupload. A Tale of the Long Tail?," Annual Conference 2013 (Duesseldorf): Competition Policy and Regulation in a Global Economic Order 79697, Verein für Socialpolitik / German Economic Association.
  6. Gregory DeAngelo & Benjamin Hansen, 2014. "Life and Death in the Fast Lane: Police Enforcement and Traffic Fatalities," American Economic Journal: Economic Policy, American Economic Association, vol. 6(2), pages 231-257, May.
  7. Phlips,Louis, 1983. "The Economics of Price Discrimination," Cambridge Books, Cambridge University Press, number 9780521283946, October.
  8. Dinah A. Vernik & Devavrat Purohit & Preyas S. Desai, 2011. "Music Downloads and the Flip Side of Digital Rights Management," Marketing Science, INFORMS, vol. 30(6), pages 1011-1027, November.
  9. Jean Tirole, 1988. "The Theory of Industrial Organization," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262200716, January.
  10. Levitt, Steven D, 1997. "Using Electoral Cycles in Police Hiring to Estimate the Effect of Police on Crime," American Economic Review, American Economic Association, vol. 87(3), pages 270-290, June.
  11. Peitz, Martin & Waldfogel, Joel, 2012. "The Oxford Handbook of the Digital Economy," OUP Catalogue, Oxford University Press, number 9780195397840.
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