The pass-through of retail crime
Hase,Carl Kasinger,Johannes
Hase,Carl
Kasinger,Johannes
Abstract
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 $33.9 million additional social costs, primarily borne by consumers.
Description
Date
2026-01
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Publisher
Research Projects
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Keywords
organized retail crime, public crime prevention, social costs of crime, pricing, market power, tax incidence, D22 - Firm Behavior: Empirical Analysis, H22 - Incidence, H32 - Firm, H76 - State and Local Government: Other Expenditure Categories, L11 - Production, Pricing, and Market Structure ; Size Distribution of Firms, L81 - Retail and Wholesale Trade ; e-Commerce, K42 - Illegal Behavior and the Enforcement of Law
Citation
Hase, C & Kasinger, J 2026, 'The pass-through of retail crime', American Economic Journal-Economic Policy. https://doi.org/10.48550/arXiv.2407.07201