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Who commits fraud? evidence from korean gas stations

Christian Ahlin, In Kyung Kim and Kyoo il Kim

International Journal of Industrial Organization, 2021, vol. 76, issue C

Abstract: In this article, we study under what circumstances a gas station is more likely to commit fuel fraud. Using a new and hitherto unexploited list of fuel fraud detections, we find evidence that stations under less favorable economic conditions – higher operating costs and possibly more competitors – engage in fraudulent activity more often. Chain-affiliated stations commit fraud less often, suggesting an effectiveness in harnessing reputational incentives. Also, fuel fraud tends to cluster among nearby stations, consistent with propagation of illicit activity from one station to others nearby. As for pricing behavior, in general gas stations appear to keep price constant and take higher price-cost margins when selling adulterated fuel, suggesting that consumers are harmed by this kind of fraud.

Keywords: Fuel fraud; Fuel price; Gas station (search for similar items in EconPapers)
JEL-codes: K42 L13 L81 (search for similar items in EconPapers)
Date: 2021
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DOI: 10.1016/j.ijindorg.2021.102719

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International Journal of Industrial Organization is currently edited by P. Bajari, B. Caillaud and N. Gandal

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Handle: RePEc:eee:indorg:v:76:y:2021:i:c:s0167718721000126