Tax evasion and strategic behaviour of the firms

Meccarelli, Massimo; Martina, Riccardo

doi:10.1016/0047-2727(88)90004-7

Cited by 53 publications

(46 citation statements)

References 7 publications

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“…However, Marrelli (1984) derives a separability result for the case of a monopolist: the evasion and shifting decisions are independent of one another as long as the audit probability is constant (see also Yaniv, 1995). The same result applies to oligopolistic markets when firms compete à la Cournot (Marrelli and Martina, 1988). Here, the amount of evasion by each firm is shown to depend, apart from the enforcement parameters, on the degree of collusion and on market shares.…”

Section: Extensionsmentioning

confidence: 53%

Tax Evasion and Tax Compliance

Franzoni

1998

SSRN Journal

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Section: Extensionsmentioning

confidence: 53%

Tax Evasion and Tax Compliance

Franzoni

1998

SSRN Journal

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“…If the tax authority cannot observe events perfectly and just uses a xed audit rule then this does not aect the product market so that the reaction functions and equilibrium remain unaltered Marrelli and Martina (1988)In our model this is the case when b, the reactivity of the rule in (6, 7), is zero. Then rms face a declaration-independent detection probability of a.…”

Section: The Rm and Its Behaviourmentioning

confidence: 99%

Tax compliance by firms and audit policy

Bayer

Cowell

2016

Research in Economics

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Firms are usually better informed than tax authorities about market conditions and the potential prots of competitors. They may try to exploit this situation by under-reporting their own taxable prots.The tax authority could oset rms' informational advantage by adopting smarter audit policies that take into account the relationship between a rm's reported prots and reports for the industry as a whole. Such an audit policy will create an externality for the decision makers in the industry and this externality can be expected to aect not only rms' reporting policies but also their market decisions. If public policy takes into account wider economic issues than just revenue raising what is the appropriate way for a tax authority to run such an audit policy? We develop some clear policy rules in a standard model of an industry and show the eect of these rules using simulations.JEL: H20, H21

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“…15 But the introduction of indirect taxation (starting from = 0) only has second-order e¤ects. These correspond to the …rst and the third term inside the bracket in equation (20) where med is replaced by M . These two e¤ects have the same magnitude when = 0: the increase in the lump sum transfer received is equal to the increase in the expenditures of the individual with the average demand.…”

Section: Simultaneous Votingmentioning

confidence: 99%

“…Virmani (1989) was the …rst to introduce concealment costs, as a way to reconcile the conventional framework with risk-neutral …rms with Alligham and Sandmo (1972)'s paradigm of evasion under uncertainty. Marelli and Martina (1988), Goerke and Runkel (2006) analyze these same decisions in an imperfectly competitive environment. The papers closest to our are Bayer and Cowell (2006) and Goerke and Runkel (2011) who both study two-stage Cournot models, with risk-neutral …rms deciding upon output and evasion while facing the risk of being audited.…”

Section: Introductionmentioning

confidence: 99%

Environmental Cost and Universal Service Obligations in the Postal Sector

Boldron¹,

Borsenberger²,

Cremer³

et al. 2011

Review of Network Economics

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The objective of this paper is to understand the determinants of the enforcement level of indirect taxation in a positive setting. We build a sequential game where individuals, who di¤er in their willingness to pay for a taxed good, vote over the enforcement level. Firms then compete à la Cournot and choose the fraction of sales taxes to evade. We assume in most of the paper that the tax rate is set exogenously. Voters face the following trade-o¤: more enforcement increases tax collection but also increases the consumer price of the goods sold in an imperfectly competitive market.We obtain that the equilibrium enforcement level is the one most-preferred by the individual with the median willingness to pay, that it is not a¤ected by the structure of the market (number of …rms) and the …rms' marginal cost, and that it decreases with the resource cost of evasion and with the tax rate. We also compare the enforcement level chosen by majority voting with the utilitarian level. In the last section, we endogenize the tax rate by assuming that individuals vote simultaneously over tax rate and enforcement level. We prove the existence of a Condorcet winner and show that it entails full enforcement (i.e., no tax evasion at equilibrium). The existence of markets with less than full enforcement then depends crucially on the fact that tax rates are not tailored to each market individually.

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Tax evasion and strategic behaviour of the firms

Cited by 53 publications

References 7 publications

Tax Evasion and Tax Compliance

Tax Evasion and Tax Compliance

Tax compliance by firms and audit policy

Environmental Cost and Universal Service Obligations in the Postal Sector

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