Spatial Competition and Cross-Border Shopping: Evidence from State Lotteries

• 成果类型: Article
• 署名作者: Knight, Brian; Schiff, Nathan
• 署名单位: Brown University; University of British Columbia
• 刊物名称: AMERICAN ECONOMIC JOURNAL-ECONOMIC POLICY
• ISSN/ISSBN: 1945-7731
• DOI: 10.1257/pol.4.4.199
• 发表日期: 2012
• 页码: 199-229
• 关键词: Tax competition; Nash equilibria; governments; avoidance; taxation; IMPACT; sales

摘要

This paper investigates competition between jurisdictions in the context of cross-border shopping for state lottery tickets. Our theoretical model, in which consumers consider both travel costs and lottery payoffs, predicts that per-resident sales should be more responsive to prices in small states with densely populated borders. Using weekly sales data from US lotteries and drawing identification from the roll-over feature of jackpots, we estimate this responsiveness and find large effects that vary significantly across states. Using these estimates, we show that competitive pressures from neighboring states may lead to substantially lower optimal prices. (JEL H27, H71, H73, R51)