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Discretionary policy, strategic complementarity and tax evasion. A strategic analysis of the Italian audit mechanism

Bruno Chiarini and Simona Monteleone

Discussion Papers from D.E.S. (Department of Economic Studies), University of Naples "Parthenope", Italy

Abstract: Underlying this work is the idea that there is a problem of strategic complementarity of individuals who choose to evade. Complementarity results from the discretionary policies of governments and the strategic implications of the Studi di Settore (Sector Studies), the mechanism used in Italy to evaluate the income (in reality, the turnover) of professional categories and small firms. In the Italian case, policy discretion and the Sector Studies lead to a failure of the coordination mechanism of taxpayers and confer a strong advantage for the coordination mechanism of tax evaders. The outcome is a coordination failure where individuals converge to the least efficient equilibrium from a social perspective.

Keywords: Tax Evasion; Tax Compliance; Audit Selection Mechanism; Complementarity. (search for similar items in EconPapers)
JEL-codes: C72 H26 (search for similar items in EconPapers)
Date: 2011-04-29
New Economics Papers: this item is included in nep-iue
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Journal Article: Discretionary policy, strategic complementarity and tax evasion: a strategic analysis of the Italian audit mechanism (2016) Downloads
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