Copycat gaming: A spatial analysis of state lottery structure |
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Authors: | Ryan P. Brown Jonathan C. Rork |
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Affiliation: | aNERA Economic Consulting, 1166 Avenue of the Americas 34th floor, New York, NY 10036-2708, United States;bDepartment of Economics, Vassar College, Department of Economics, Box 229, 124 Raymond Avenue, Poughkeepsie, NY 12604, United States |
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Abstract: | In models of tax competition, tax instruments are explicit; all parties are aware of the tax and respond to incentives provided therein. In the case of state lotteries, the tax is the amount of sales collected but not redistributed as prizes. Using data from 1967 to 2000, we show that although such a tax is implicit, states still engage in tax competition; if neighboring states raise their prize payout by 10% (thereby lowering their lottery tax), the home state will respond with up to a 5% increase in their prize payout. |
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Keywords: | Tax competition State lotteries |
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