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Corporate Tax Avoidance and Industry Concentration

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

No 2020-29, Working Papers ECARES from ULB -- Universite Libre de Bruxelles

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)
Pages: 54 p.
Date: 2020-07
New Economics Papers: this item is included in nep-ind and nep-pub
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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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