IdEP Seminar, Johannes Kasinger - "The Pass-through of Retail Crime "

This paper shows that retailers increase prices in response to organized retail crime. We match store-level crime data to scanner data from the universe of transactions for cannabis retailers in Washington state. Using quasi-experimental variation from robberies and burglaries, we find a 1.5-1.8% price increase at victimized stores and nearby competitors. This rise is not driven by short-to-medium-term demand changes but is consistent with an own-cost shock. Effects are larger for independent stores and less concentrated markets. We estimate that crime imposes a 1% ‘hidden’ unit tax on affected stores, implying $28.4 million additional social costs, primarily borne by consumers.

This paper is joint work with Carl Hase (Goethe University Frankfurt)

Johannes Kasinger
Assistant professor of Marketing at the Tilburg School of Economics and Management