Payment Evasion

Stefan Buehler, Daniel Halbheer and Michael Lechner

No 1435, Economics Working Paper Series from University of St. Gallen, School of Economics and Political Science

Abstract: 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.

Keywords: Payment Evasion; Pricing; Fine; Self-Selection (search for similar items in EconPapers)
Pages: 34 pages
Date: 2014-11
New Economics Papers: this item is included in nep-iue
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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http://ux-tauri.unisg.ch/RePEc/usg/econwp/EWP-1435.pdf (application/pdf)

Related works:
Journal Article: Payment Evasion (2017)
Working Paper: Payment Evasion (2015)
Working Paper: Payment Evasion (2015)
Working Paper: Payment Evasion (2014)
Working Paper: Payment Evasion (2014)
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Persistent link: https://EconPapers.repec.org/RePEc:usg:econwp:2014:35

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