Local Interaction in Tax Evasion

Barnabas M. Garay (), Andras Simonovits () and Janos Toth ()
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Barnabas M. Garay: Faculty of Information Technology - P zm ny P‚ter Catholic University
Andras Simonovits: Institute of Economics Hungarian Academy of Sciences
Janos Toth: Department of Analysis - Budapest University of Technology and Economics

No 1104, CERS-IE WORKING PAPERS from Institute of Economics, Centre for Economic and Regional Studies

Abstract: We study a model of tax evasion, where a flat-rate tax only finances the provision of public goods. Deciding on reported income, each individual takes into account that the less he reports, the higher is his private consumption but the lower is his moral satisfaction. The latter depends on his own current report and average previous reports of his neighbors. Under quite general assumptions, the steady state reported income is symmetric and the process converges to the steady state.

Keywords: tax evasion; steady state; asymptotic stability; symmetrization; networks; monotone maps (search for similar items in EconPapers)
JEL-codes: C62 H26 (search for similar items in EconPapers)
Pages: 10 pages
Date: 2011-01
New Economics Papers: this item is included in nep-pbe, nep-pub and nep-ure
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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