IDEAS home Printed from https://ideas.repec.org/p/sin/wpaper/04-a005.html
   My bibliography  Save this paper

On the Public Economics of Casino Gambling

Author

Abstract

This paper studies casino-style gambling from the public economics point of view in a jurisdiction populated by oligopolistically competitive legal casinos. We consider three different regimes: laissez-faire, entry regulation and tax regulation. The model highlights three important external effects from casino-style gambling: non-casino income creation, social disorder costs, and casino exporting to other jurisdictions. In the generalized case with an endogenously-determined ratio of local to total gamblers, we allow the configuration of casinos to be centralized or jurisdiction-wide dispersed. A complete comparison between equilibrium and command optimum outcomes is provided, and the welfare consequences under the three regimes and two casino configurations are examined.

Suggested Citation

  • Juin-Jen Chang & Ching-Chong Lai & Ping Wang, 2004. "On the Public Economics of Casino Gambling," IEAS Working Paper : academic research 04-A005, Institute of Economics, Academia Sinica, Taipei, Taiwan.
    • Handle: RePEc:sin:wpaper:04-a005
    as

    Download full text from publisher

    File URL: https://www.econ.sinica.edu.tw/~econ/pdfPaper/04-A005.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Seade, Jesus K, 1980. "On the Effects of Entry," Econometrica, Econometric Society, vol. 48(2), pages 479-489, March.
    2. William R. Eadington, 1999. "The Economics of Casino Gambling," Journal of Economic Perspectives, American Economic Association, vol. 13(3), pages 173-192, Summer.
    3. Raymond D. Sauer, 2001. "The political economy of gambling regulation," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 22(1-3), pages 5-15.
    4. Thomas A. Garrett, 2004. "Casino gaming and local employment trends," Review, Federal Reserve Bank of St. Louis, vol. 86(Jan), pages 9-22.
    5. Julie Hunsaker, 2001. "The impact of riverboat casinos on the demand for gambling at casino resorts: a theoretical and empirical investigation," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 22(1-3), pages 97-111.
    6. Earl L. Grinols & David B. Mustard, 2001. "Management and information issues for industries with externalities: the case of casino gambling," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 22(1-3), pages 1-3.
    7. N. Gregory Mankiw & Michael D. Whinston, 1986. "Free Entry and Social Inefficiency," RAND Journal of Economics, The RAND Corporation, vol. 17(1), pages 48-58, Spring.
    8. Bonomo, Vittorio A & Johnson, Dana J & Thompson, G Rodney, 1995. "The Impact of the," The Financial Review, Eastern Finance Association, vol. 30(1), pages 23-40, February.
    9. Ricardo C. Gazel & Dan S. Rickman & William N. Thompson, 2001. "Casino gambling and crime: a panel study of Wisconsin counties," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 22(1-3), pages 65-75.
    10. Gary S. Becker, 1983. "A Theory of Competition Among Pressure Groups for Political Influence," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 98(3), pages 371-400.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Juin-Jen Chang & Ching-Chong Lai & Ping Wang, 2010. "Casino regulations and economic welfare," Canadian Journal of Economics, Canadian Economics Association, vol. 43(3), pages 1058-1085, August.
    2. Juin-Jen Chang & Ching-Chong Lai & Ping Wang, 2017. "A Tale of Two Cities: Cross-Border Casino Competition Between Detroit and Windsor," NBER Working Papers 23969, National Bureau of Economic Research, Inc.
    3. Chang, Juin-Jen & Fiedler, Ingo & Lai, Ching-Chong & Wang, Ping, 2021. "Cross-border casino competition, Externalities and Optimal Tax Policy: A Unified Theory with Quantitative Analysis," Regional Science and Urban Economics, Elsevier, vol. 88(C).
    4. J. Anthony Cookson, 2010. "Institutions and Casinos on American Indian Reservations: An Empirical Analysis of the Location of Indian Casinos," Journal of Law and Economics, University of Chicago Press, vol. 53(4), pages 651-687.
    5. John Evans & John Fingleton, 2002. "Entry Regulation and the Influence of an Incumbent Special Interest Group," CESifo Working Paper Series 787, CESifo.
    6. David, Maia & Nimubona, Alain-Désiré & Sinclair-Desgagné, Bernard, 2011. "Emission taxes and the market for abatement goods and services," Resource and Energy Economics, Elsevier, vol. 33(1), pages 179-191, January.
    7. Kurata, Hiroshi & Ohkawa, Takao & Okamura, Makoto, 2009. "Location choice, competition, and welfare in non-tradable service FDI," International Review of Economics & Finance, Elsevier, vol. 18(1), pages 20-25, January.
    8. Krishnendu Ghosh Dastidar & Sugata Marjit, 2022. "Market size, entry costs and free entry Cournot equilibrium," Journal of Economics, Springer, vol. 136(2), pages 97-114, July.
    9. Marco de Pinto & Laszlo Goerke, 2020. "Welfare‐enhancing Trade Unions in an Oligopoly with Excessive Entry," Manchester School, University of Manchester, vol. 88(1), pages 60-90, January.
    10. David Forrest, 2013. "An Economic And Social Review Of Gambling In Great Britain," Journal of Gambling Business and Economics, University of Buckingham Press, vol. 7(3), pages 1-33.
    11. Luca Colombo & Paola Labrecciosa & Patrick Paul Walsh, 2005. "Optimal Corporation Tax: An I.O. Approach," The Institute for International Integration Studies Discussion Paper Series iiisdp97, IIIS.
    12. Yongmin Chen & Tianle Zhang, 2018. "Entry and Welfare in Search Markets," Economic Journal, Royal Economic Society, vol. 128(608), pages 55-80, February.
    13. de Pinto Marco & Goerke Laszlo, 2019. "Efficiency Wages in Cournot-Oligopoly," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 19(4), pages 1-13, October.
    14. Shoji Haruna & Rajeev Goel, 2011. "R&D, free entry, and social inefficiency," Economics of Innovation and New Technology, Taylor & Francis Journals, vol. 20(1), pages 89-101.
    15. Marco de Pinto & Laszlo Goerke & Alberto Palermo, 2024. "Informational rents and the excessive entry theorem: The case of hidden action," Scottish Journal of Political Economy, Scottish Economic Society, vol. 71(2), pages 237-252, May.
    16. Holloway, Garth J., 1992. "The Representative Firm, Endogenous Output Decisions And Consistent Conjectural Variations In Oligopoly," Working Papers 225876, University of California, Davis, Department of Agricultural and Resource Economics.
    17. Michael J. Hicks, 2014. "Do Good Fences Make Good Neighbors? The Cross Border Impact of Casino Entrance," Growth and Change, Wiley Blackwell, vol. 45(1), pages 5-20, March.
    18. John L. Scott & Paul S. Nelson, 2007. "Voting with a Hand on the Bible and Not on the Wallet: The 1996 Video Poker Referendum in Louisiana," American Journal of Economics and Sociology, Wiley Blackwell, vol. 66(3), pages 571-591, July.
    19. Richard Thalheimer, 2008. "Government restrictions and the demand for casino and parimutuel wagering," Applied Economics, Taylor & Francis Journals, vol. 40(6), pages 773-791.
    20. Hamilton, Stephen F. & Sunding, David L., 2000. "Product liability, entry incentives and market structure," International Review of Law and Economics, Elsevier, vol. 20(2), pages 269-283, June.

    More about this item

    Keywords

    Casino gambling; externalities; oligopoly pricing; entry; tax regulation;
    All these keywords.

    JEL classification:

    • L83 - Industrial Organization - - Industry Studies: Services - - - Sports; Gambling; Restaurants; Recreation; Tourism
    • D21 - Microeconomics - - Production and Organizations - - - Firm Behavior: Theory
    • D62 - Microeconomics - - Welfare Economics - - - Externalities
    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:sin:wpaper:04-a005. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: HsiaoyunLiu (email available below). General contact details of provider: https://edirc.repec.org/data/sinictw.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.