Payment Evasion

Michael Lechner, Daniel Halbheer and Stefan Buehler

No 10581, CEPR Discussion Papers from Centre for Economic Policy Research

Abstract: This paper models payment evasion as a source of profit by letting the firm choose the purchase price and the fine imposed on detected payment evaders. For a given price and fine, the consumers purchase, evade payment, or choose the outside option. We show that payment evasion leads to a form of second-degree price discrimination in which the purchase price exceeds the expected fine faced by payment evaders. We also show that higher fines do not necessarily reduce payment evasion. Using data on fare dodging on public transportation, we quantify expected fines and payment evasion.

Keywords: Deterrence; Fine; Price discrimination; Pricing (search for similar items in EconPapers)
JEL-codes: L20 L30 (search for similar items in EconPapers)
Date: 2015-05
New Economics Papers: this item is included in nep-ind and nep-mic
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

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Related works:
Journal Article: Payment Evasion (2017)
Working Paper: Payment Evasion (2015)
Working Paper: Payment Evasion (2014)
Working Paper: Payment Evasion (2014)
Working Paper: Payment Evasion (2014)
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