Tax Evasion and Tacit Collusion

Florian Baumann and Tim Friehe

Public Finance Review, 2013, vol. 41, issue 5, 633-657

Abstract: This article analyzes the interaction between tax evasion and tacit collusion. We show that the possibility of evading taxes generally influences the incentives to form a cartel. We establish that whether tax evasion increases or decreases the set of circumstances allowing stable collusion depends on (1) the relation between the benefits of tax evasion and legal after-tax profits and (2) effective enforcement of antitrust laws. In considering variations in tax enforcement and antitrust enforcement, we find that stricter tax enforcement may actually increase the level of tax evasion, as it may promote the cartelization of industries. In contrast, stricter antitrust enforcement lowers incentives for cartelization, thereby possibly reducing tax evasion at the same time.

Keywords: tacit collusion; tax evasion; activity level; law enforcement (search for similar items in EconPapers)
Date: 2013
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://journals.sagepub.com/doi/10.1177/1091142112459211 (text/html)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:sae:pubfin:v:41:y:2013:i:5:p:633-657

DOI: 10.1177/1091142112459211

Access Statistics for this article

More articles in Public Finance Review
Bibliographic data for series maintained by SAGE Publications ().