  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.
