What traders know: the (mis)perceptions of formal and informal cross-border traders

Paolo Falco and Eleanor Wiseman

No wp-2024-19, WIDER Working Paper Series from World Institute for Development Economic Research (UNU-WIDER)

Abstract: Cross-border traders face a choice between official and unofficial border crossings. The latter allow them to evade taxes, but expose them to other risks, such as bribes, fines, and arrest. We investigate the perceptions of cross-border traders about the risks of trading officially vs unofficially at the border between Kenya and Uganda. We find that traders overestimate the risks of trading officially relative to the same risks when trading unofficially. In reality, the measured risks of trading through the official border are lower.

Keywords: Trade; Formality; Informality; Subjective beliefs; Corruption; Tax evasion; Risk attitudes (search for similar items in EconPapers)
Date: 2024
New Economics Papers: this item is included in nep-int and nep-iue
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