Tariff Evasion and Customs Corruption: Does Pre-Shipment Inspection Help?

Jose Anson, Olivier Cadot and Marcelo Olarreaga ()
Additional contact information
Jose Anson: Universal Postal Union
Olivier Cadot: University of Lausanne

The B.E. Journal of Economic Analysis & Policy, 2006, vol. contributions.5, issue 1

Abstract: This paper provides a new approach to the evaluation of pre-shipment inspection (PSI) programs as ways of improving tariff-revenue collection and reducing fraud when customs administrations are corrupt. We build a model highlighting the contribution of private surveillance firms to the generation of information and describing how incentives for underinvoicing and collusive behaviour between importers and customs are affected by the introduction of PSI. It is shown theoretically that the introduction of PSI has an ambiguous effect on the level of fraud. Empirically, our econometric results suggest that the introduction of PSI services increased underinvoicing in Argentina and Indonesia, and reduced it in the Philippines.

Keywords: tariff evasion; underinvoicing; pre-shipment inspection (search for similar items in EconPapers)
JEL-codes: H26 F14 D82 (search for similar items in EconPapers)
Date: 2006

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Related works:
Working Paper: Tariff evasion and customs corruption: does pre-shipment inspection help? (2003)
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Persistent link: http://EconPapers.repec.org/RePEc:bpj:bejeap:v:contributions.5:y:2006:i:1:n:33

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