Carl Hase

Research

The Pass-through of Retail Crime (with Johannes Kasinger)

• Conditionally accepted at American Economic Journal: Economic Policy

This paper shows that retailers increase prices in response to organized retail crime, revealing a substantial aspect of retail crime's social costs. We match detailed information on store-level crimes to administrative scanner data from the universe of transactions for cannabis retailers in Washington state. Exploiting quasi-experimental variation from the timing of store-level robberies and burglaries, we find that crimes cause a 1.8% increase in retail prices at victimized stores. Nearby rivals of victimized stores increase prices by a similar amount with a two-month lag. Retailers’ price responses are not driven by demand effects, increased wholesale costs, or strategic price responses. Instead, they are consistent with precautionary security expenditures. We find the largest pass-through rates for independent stores and in less concentrated markets. We estimate that crime imposes a 1% "hidden" unit tax on affected stores, implying an annual negative welfare effect of approximately $30.6 million, with consumers bearing two-thirds of this burden.

Vertical Shocks and Cost Pass-through: Evidence from Matched Scanner Data (Job Market Paper)

Many taxes and cost shocks affect more than one stage of the production process. This paper demonstrates that the vertical scope of a tax or cost shock has important implications for estimating and interpreting pass-through. Beyond the direct cost shock from the policy itself, firms can face an indirect cost shock from higher intermediate goods prices. The latter gives rise to divergent pass-through rates across firms with otherwise similar exposure to the tax or policy shock. Exploiting the vertically disintegrated market structure and rich scanner data of the Washington state cannabis industry, I demonstrate these points in the context of the large labor cost shock from minimum wage hikes.  This paper illustrates how properly accounting for the vertical scope of cost shocks is crucial for evaluating  'who pays' for a variety of policies and cost shocks.

Enforcement Spillovers in Product Markets: Evidence from E-cigarettes (with Thomas Otter). Draft coming soon.

This paper demonstrates that regulatory enforcement can generate large spillover effects in product markets. Using quasi-experimental variation from unannounced FDA tobacco compliance inspections at U.S. convenience stores, we estimate the effect of violations on the sale of unauthorized e-cigarette products at violative stores and their rivals. We find that in most U.S. states, an e-cigarette violation at one store induces voluntary compliance at nearby rivals. However, in states with low penalty collection rates, rivals increase sales of unauthorized products, indicating that consumers substitute out of violative and into rival stores. Our findings suggest that diverting resources away from inspections and into penalty collection would increase regulatory compliance and substantially reduce unauthorized e-cigarette consumption in the United States.