 Can Enforcement Backfire? Crime Displacement in the Context of Customs Reform in the PhilippinesNo 520, Working Papers from Research Seminar in International Economics, University of Michigan Abstract: Increased enforcement can lead crime to be displaced to alternative lawbreaking methods. In theory, crime displacement should respond positively to the size of profits threatened by enforcement. If enforcement displaces crime towards lawbreaking methods with lower variable costs, the overall crime rate need not fall. This paper examines a customs reform in the Philippines that raised enforcement against a specific method of avoiding import duties. The reform constituted a quasi-experiment: the increased enforcement applied only to shipments from a subset of countries, so that corresponding shipments from all other countries serve as a comparison group. Increased enforcement reduced the targeted method of duty avoidance, but led to substantial displacement to an alternative duty-avoidance method (shipping via duty-exempt export processing zones), amounting to 2.7 percent of total imports from treatment countries. The hypothesis that the reform led to zero change in total duty avoidance cannot be rejected. Displacement was greater for products with higher tariff rates and import volumes, consistent with the existence of fixed costs of switching to alternative duty-avoidance methods. JEL-codes: D73 F13 H26 K42 O23 (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:mie:wpaper:520 Access Statistics for this paper More papers in Working Papers from Research Seminar in International Economics, University of Michigan Contact information at EDIRC. |
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