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Corporate Tax Avoidance and Industry Concentration

Julien Martin (), Mathieu Parenti () and Farid Toubal

No 8469, CESifo Working Paper Series from CESifo

Abstract: This paper argues that tax avoidance by large corporations has contributed to the 25% increase in concentration among U.S. firms since the mid-1990s. Corporate tax avoidance gives large firms a competitive edge, which translates into larger market shares and an increase in the granularity of the economy. We develop IV and difference-in-differences strategies that show the causal impact of tax avoidance on firm-level sales. Had firms not resorted to tax avoidance in 2017, our results imply that the average industry concentration would have been 8.3% lower, which is around its early 2000 level.

Keywords: tax avoidance; industry concentration; IRS audit probability (search for similar items in EconPapers)
JEL-codes: D22 D40 F23 H26 L11 (search for similar items in EconPapers)
Date: 2020
New Economics Papers: this item is included in nep-acc, nep-ind and nep-pub
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (9) Track citations by RSS feed

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https://www.cesifo.org/DocDL/cesifo1_wp8469.pdf (application/pdf)

Related works:
Working Paper: Corporate Tax Avoidance and Industry Concentration (2021)
Working Paper: Corporate Tax Avoidance and Industry Concentration (2021)
Working Paper: Corporate tax avoidance and industry concentration (2020) Downloads
Working Paper: Corporate Tax Avoidance and Industry Concentration (2020) Downloads
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