Tax Evasion and Monopoly Output Decisions Revisited: Strategic Firm Behavior
AbstractThis note reexamines the model of tax evasion of the monopolistic firm with profit taxes by incorporating the firm's strategic behavior for tax avoidance. It is shown that under certain conditions, the monopolist's decisions on output and expenditure are no longer separable from the evasion decision and there is a trade-off between production efficiency and cost efficiency. We then derive the optimal profit tax rate to investigate some properties of profit taxation.
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Bibliographic InfoArticle provided by College of Business, and College of Finance, Feng Chia University, Taichung, Taiwan in its journal International Journal of Business and Economics.
Volume (Year): 5 (2006)
Issue (Month): 1 (April)
tax evasion; strategic expenditure; optimal profit taxation;
Find related papers by JEL classification:
- D8 - Microeconomics - - Information, Knowledge, and Uncertainty
- H26 - Public Economics - - Taxation, Subsidies, and Revenue - - - Tax Evasion
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- Allingham, Michael G. & Sandmo, Agnar, 1972. "Income tax evasion: a theoretical analysis," Journal of Public Economics, Elsevier, vol. 1(3-4), pages 323-338, November.
- Sang-Ho Lee & Hae-Shin Hwang, 2003. "Partial Ownership For The Public Firm And Competition," The Japanese Economic Review, Japanese Economic Association, vol. 54(3), pages 324-335.
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- Gideon Yaniv, 1996. "Tax Evasion and Monopoly Output Decisions: Note," Public Finance Review, , vol. 24(4), pages 501-505, October.
- Marrelli, Massimo, 1984. "On indirect tax evasion," Journal of Public Economics, Elsevier, vol. 25(1-2), pages 181-196, November.
- Blackmon, B Glenn, Jr, 1992. "The Incremental Surplus Subsidy and Rate-of-Return Regulation," Journal of Regulatory Economics, Springer, vol. 4(2), pages 187-96, June.
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