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Competition and Tax Evasion: A Cross Country Study


  • Yiqun Wang

    () (University of Illinois at Urbana-Champaign, Department of Economics, 214 DKH, 1407 W. Gregory, Urbana, Illinois 61801,U.S.A.)


This paper investigates the determinants of tax evasion, utilizing rich cross-country data of firm-level survey from the World Bank, and shows that competition is a key factor determining evasion activities; however its effect displays a decreasing trend. It is also shown that business obstacles facing firms such as tax administration and unfair practices play significant roles in explaining tax evasion. Firm characteristics such as size, age, ownership are also found important determinants. The empirical analysis controls for industry and country-level effects, for instance quality of the legal environment.

Suggested Citation

  • Yiqun Wang, 2012. "Competition and Tax Evasion: A Cross Country Study," Economic Analysis and Policy, Elsevier, vol. 42(2), pages 189-208, September.
  • Handle: RePEc:eee:ecanpo:v:42:y:2012:i:2:p:189-208

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    More about this item


    tax evasion; competition; legal environment;

    JEL classification:

    • H26 - Public Economics - - Taxation, Subsidies, and Revenue - - - Tax Evasion and Avoidance
    • O17 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Formal and Informal Sectors; Shadow Economy; Institutional Arrangements
    • L25 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Performance


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