On the Public Economics of Casino Gambling

Juin-jen Chang, Ching-chong Lai and Ping Wang

No 04-A005, IEAS Working Paper : academic research from Institute of Economics, Academia Sinica, Taipei, Taiwan

Abstract: 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.

Keywords: Casino gambling; externalities; oligopoly pricing; entry; tax regulation (search for similar items in EconPapers)
JEL-codes: D21 D43 D62 L83 (search for similar items in EconPapers)
Pages: 34 pages
Date: 2004-02
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