Who commits fraud? evidence from korean gas stations.
Ahlin C. Kim I.K. Kim K.I.
May 2021Elsevier Inc.
International Journal of Industrial Organization
2021#76
In this article, we study under what circumstances a gas station is more likely to commit fuel fraud. Using a new and hitherto unexploited list of fuel fraud detections, we find evidence that stations under less favorable economic conditions – higher operating costs and possibly more competitors – engage in fraudulent activity more often. Chain-affiliated stations commit fraud less often, suggesting an effectiveness in harnessing reputational incentives. Also, fuel fraud tends to cluster among nearby stations, consistent with propagation of illicit activity from one station to others nearby. As for pricing behavior, in general gas stations appear to keep price constant and take higher price-cost margins when selling adulterated fuel, suggesting that consumers are harmed by this kind of fraud.
Fuel fraud , Fuel price , Gas station
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Department of Economics, Michigan State University, 486 West Circle Drive, East Lansing, 48824, MI, United States
Department of Economics, Nazarbayev University, 53 Kabanbay Batyr, Astana, 010000, Kazakhstan
Department of Economics
Department of Economics
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