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Can Enforcement Backfire? Crime Displacement in the Context of Customs Reform in the Philippines

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  • Dean Yang

    (University of Michigan)

Abstract

Increased enforcement can lead crime to be displaced to alternative lawbreaking methods. In theory, crime displacement should respond positively to the size of profits threatened by enforcement. If enforcement displaces crime towards lawbreaking methods with lower variable costs, the overall crime rate need not fall. This paper examines a customs reform in the Philippines that raised enforcement against a specific method of avoiding import duties. The reform constituted a quasi-experiment: the increased enforcement applied only to shipments from a subset of countries, so that corresponding shipments from all other countries serve as a comparison group. Increased enforcement reduced the targeted method of duty avoidance, but led to substantial displacement to an alternative duty-avoidance method (shipping via duty-exempt export processing zones), amounting to 2.7 percent of total imports from treatment countries. The hypothesis that the reform led to zero change in total duty avoidance cannot be rejected. Displacement was greater for products with higher tariff rates and import volumes, consistent with the existence of fixed costs of switching to alternative duty-avoidance methods.

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Bibliographic Info

Paper provided by Research Seminar in International Economics, University of Michigan in its series Working Papers with number 520.

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Length: 44 pages
Date of creation: 2004
Date of revision:
Handle: RePEc:mie:wpaper:520

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Web page: http://www.fordschool.umich.edu/rsie/
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Citations

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Cited by:
  1. Dean Yang, 2005. "Integrity for Hire: An Analysis of a Widespread Program for Combating Customs Corruption," Working Papers, Research Seminar in International Economics, University of Michigan 525, Research Seminar in International Economics, University of Michigan.
  2. Nitsch, Volker, 2011. "Trade Mispricing and Illicit Flows," Darmstadt Discussion Papers in Economics 54540, Darmstadt Technical University, Department of Business Administration, Economics and Law, Institute of Economics (VWL).
  3. Dequiedt, V. & Geourjon, A.-M. & Rota-Graziosi, G., 2012. "Mutual supervision in preshipment inspection programs," Journal of Development Economics, Elsevier, vol. 99(2), pages 282-291.
  4. Ferrier, Peyton Michael, 2009. "The Economics of Agricultural and Wildlife Smuggling," Economic Research Report 55951, United States Department of Agriculture, Economic Research Service.
  5. Casaburi, Lorenzo & Troiano, Ugo, 2013. "Ghost-House Busters: The Electoral Response to a Large Anti Tax Evasion Program," MPRA Paper 52242, University Library of Munich, Germany.
  6. Jason M. Lindo & Charles Stoecker, 2014. "Drawn Into Violence: Evidence On “What Makes A Criminal” From The Vietnam Draft Lotteries," Economic Inquiry, Western Economic Association International, vol. 52(1), pages 239-258, 01.
  7. Grégoire ROTA-GRAZIOSI & Anne-Marie GEOURJON & Vianney DEQUIEDT, 2009. "Contrats Incitatifs et Réforme des Douanes dans les PED : une Application des Modèles d’Agence Hiérarchique," Working Papers 200906, CERDI.
  8. Ross, Amanda, 2012. "Crime, police, and truth-in-sentencing: The impact of state sentencing policy on local communities," Regional Science and Urban Economics, Elsevier, vol. 42(1-2), pages 144-152.
  9. Raymond Fisman & Shang-Jin Wei, 2009. "The Smuggling of Art, and the Art of Smuggling: Uncovering the Illicit Trade in Cultural Property and Antiques," American Economic Journal: Applied Economics, American Economic Association, vol. 1(3), pages 82-96, July.
  10. Hunt, Jennifer & Laszlo, Sonia, 2012. "Is Bribery Really Regressive? Bribery’s Costs, Benefits, and Mechanisms," World Development, Elsevier, vol. 40(2), pages 355-372.
  11. Velea, Irina & Cadot, Olivier & Wilson, John S., 2010. "Do private inspection programs affect trade facilitation ?," Policy Research Working Paper Series 5515, The World Bank.
  12. Lorenzo Rotunno & Pierre-Louis Vézina, 2012. "Chinese Networks and Tariff Evasion," The World Economy, Wiley Blackwell, vol. 35(12), pages 1772-1794, December.
  13. Kazuki Onji, 2009. "A Tale of Pork Prices: Evasion and Attenuation of a Japanese Tariff," Asia Pacific Economic Papers, Australia-Japan Research Centre, Crawford School of Public Policy, The Australian National University 382, Australia-Japan Research Centre, Crawford School of Public Policy, The Australian National University.
  14. Hunt, Jennifer, 2010. "Bribery in health care in Uganda," Journal of Health Economics, Elsevier, vol. 29(5), pages 699-707, September.
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