Tariffs and imports mis-invoicing under oligopoly

Amit K. Biswas and Sarbajit Sengupta

No 06/10, Dresden Discussion Paper Series in Economics from Technische Universität Dresden, Faculty of Business and Economics, Department of Economics

Abstract: Mis-match of trade statistics between developed and developing countries indicate a substantial mis-invoicing of trade figures, primarily by developing country traders. This is due to the inflexible exchange rate regimes, severe import restrictions and export subsidies prevailing in LDCs. In this paper we focus on the import under-invoicing due to high tariff barriers in a market where domestic producers compete with importers. Specifically, we examine how tariff levels, market structure and government intervention (in the form of intensity of monitoring and severity of penalties) affect the levels of under-invoicing. We also look at the optimal levels of import tariff and instruments of government intervention in these circumstances.

Keywords: import tariff; under-invoicing; Cournot oligopoly (search for similar items in EconPapers)
JEL-codes: F12 F13 L13 (search for similar items in EconPapers)
Date: 2010
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:tuddps:0610

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