Empowering consumers to reduce corporate tax avoidance: Theory and Experiments
Antonio Morales () and
Additional contact information
Enrique Fatas: Center for Social Norms and Behavioral Dynamics, University of Pennsylvania and School of Management, Universidad ICESI
Axel Sonntag: Institute for Advanced Studies Vienna and Vienna Center for Experimental Economics, University of Vienna
No 21, IHS Working Paper Series from Institute for Advanced Studies
We analyze corporate tax avoidance in a theoretical model and in a stylized experimental Bertrand setting in which symmetric firms and consumers sell and buy a homogeneous product, when human participants make decisions as firms and consumers. We investigate how market power and information disclosure of firms’ tax avoidance behavior impacts corporate tax avoidance and market competition. By imposing a tax rating, corporate tax behavior becomes more transparent, and consumers actively and costly boycott firms that do not pay their taxes. Firms adapt and anticipate consumer boycotts and increase tax payments, and prices. When rating disclosure is voluntary, the positive effect on corporate tax compliance vanishes in large markets.
Keywords: tax avoidance; policy measure; tax rating; transparency; lab experiment (search for similar items in EconPapers)
JEL-codes: C92 D78 D82 H26 L15 (search for similar items in EconPapers)
Pages: 47 pages
New Economics Papers: this item is included in nep-com, nep-exp, nep-iue and nep-pbe
References: View references in EconPapers View complete reference list from CitEc
Citations: Track citations by RSS feed
Downloads: (external link)
http://www.ihs.ac.at/publications/eco/ihswps-21.pdf First version, 2020 (application/pdf)
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
Persistent link: https://EconPapers.repec.org/RePEc:ihs:ihswps:21
Ordering information: This working paper can be ordered from
Institute for Advanced Studies - Library, Josefstädterstr. 39, A-1080 Vienna, Austria
Access Statistics for this paper
More papers in IHS Working Paper Series from Institute for Advanced Studies Josefstädterstr. 39, A-1080 Vienna, Austria. Contact information at EDIRC.
Bibliographic data for series maintained by Doris Szoncsitz ().