Globalizing Tax Evasion: How Competition Affects the Size of the Underground Economy
Liliane Giardino-Karlinger ()
Vienna Economics Papers from University of Vienna, Department of Economics
The underground economy expanded substantially during the late 1990s, both in the industrialized and the developing world. I argue that this development is a response to the sharp increase in market competition worldwide. I develop a parsimonious oligopoly model of free entry and free sector choice, where the intensity of competition is captured by the degree of (exogenous) product differentiation. Operating in the underground economy reduces variable costs, but comes at the risk of being detected and fined. The keener is competition, the higher is the pressure to reduce costs, and the more pervasive is the underground economy.
JEL-codes: H26 L11 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-com and nep-pub
References: View references in EconPapers View complete reference list from CitEc
Citations View citations in EconPapers (2) Track citations by RSS feed
Downloads: (external link)
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:vie:viennp:0801
Access Statistics for this paper
More papers in Vienna Economics Papers from University of Vienna, Department of Economics
Bibliographic data for series maintained by Paper Administrator ().