American Economic Journal Economic Policy· 2026Q1
The Pass-Through of Retail Crime
- 1citations
- Q1SCImago
- 2026year
Short summary
Retailers pass on the costs of organized retail crime by increasing prices by 1.7-1.8% at victimized stores and nearby competitors.
AI-generated from the title and abstract; the full text is not read.
Key points
- Retailers increase prices by 1.7-1.8% at stores experiencing crime and at nearby competitors.
- Price increases are linked to crime-related cost shocks, not short-term demand changes.
- Independent stores and those in less concentrated markets show larger price effects.
- Organized retail crime imposes an estimated 1% "hidden" unit tax on affected stores.
AI-generated from the title and abstract; the full text is not read.
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. (JEL D22, H22, H76, K42, L81)
The authors' abstract, as published at the source. American Economic Journal Economic Policy, 2026 · DOI ↗
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