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Game-theoretic model of tax evasion: analysis of agents’ interaction and optimization of tax burden

Dmytro Sokolovskyi ()

MPRA Paper from University Library of Munich, Germany

Abstract: The article analyzes a tax evasion problem using game-theoretic tools. The model develops a well-known Alligham–Sandmo classic model by introducing parameters of “transparency” of detected violations, of cost of control, of tax evasion and of conscientious tax payment. For that model we calculated Nash-equilibrium conditions in pure strategies. Based on this we investigated the problem of optimization of real tax burden. It is shown that curve describing the dependence between actual tax burden from declared one has not 1 (like the Laffer curve), but 3 local maxima. Those findings may contribute to better calculation of tax burden in the real economy.

Keywords: tax evasion; game-theoretic model; Nash-equilibrium; tax burden; pure strategies; Laffer curve (search for similar items in EconPapers)
JEL-codes: C72 H26 H30 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-gth, nep-iue and nep-pbe
Date: 2018-04-30
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