American Economic Journal:
Economic Policy
ISSN 1945-7731 (Print) | ISSN 1945-774X (Online)
The Pass-Through of Retail Crime
American Economic Journal: Economic Policy
(pp. 457–91)
Abstract
This paper shows 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 1.7–1.8 percent price increase at victimized stores and nearby competitors. This rise is not driven by short-to-medium-term demand changes but is consistent with crime-related cost shocks. Effects are larger for independent stores and less concentrated markets. We estimate crime imposes a 1 percent "hidden" unit tax on affected stores, implying $30.7 million in additional social costs, primarily borne by consumers.Citation
Hase, Carl, and Johannes Kasinger. 2026. "The Pass-Through of Retail Crime." American Economic Journal: Economic Policy 18 (4): 457–91. DOI: 10.1257/pol.20240889Additional Materials
JEL Classification
- D22 Firm Behavior: Empirical Analysis
- H22 Taxation and Subsidies: Incidence
- H76 State and Local Government: Other Expenditure Categories
- K42 Illegal Behavior and the Enforcement of Law
- L81 Retail and Wholesale Trade; e-Commerce