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Tax Evasion and Monopoly Output Decisions: Note

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  • Gideon Yaniv

    (Tel-Aviv University National Insurance Institute, Israel)

Abstract

This note readdresses the issue of monopoly profit tax evasion and its output decisions recently reexamined in this journal by Wang (1990) under the assumption that the probability of detection and the penalty rate increase with the amount of understated profit. The note shows that contrary to Wang's allegation, the separabil ity of the monopolist's output decision from its tax evasion behavior (obtained by Wang and Conant, 1988, under the assumption that the probability of detection and the penalty rate are exogenously fixed) still holds under his more realistic assump tions. Consequently, profit taxes are still neutral with respect to the monopolist's profit-ntaximizing output.

Suggested Citation

  • Gideon Yaniv, 1996. "Tax Evasion and Monopoly Output Decisions: Note," Public Finance Review, , vol. 24(4), pages 501-505, October.
  • Handle: RePEc:sae:pubfin:v:24:y:1996:i:4:p:501-505
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    Cited by:

    1. Laszlo Goerke, 2008. "Bureaucratic corruption and profit tax evasion," Economics of Governance, Springer, vol. 9(2), pages 177-196, May.
    2. Laszlo Goerke, 2007. "Corporate and personal income tax declarations," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 14(3), pages 281-292, June.
    3. Che-chiang Huang & Horn-in Kuo, 2014. "A note on the neutrality of profit taxes with tax evasion and tax avoidance," Economics Bulletin, AccessEcon, vol. 34(3), pages 2038-2043.
    4. Goerke, Laszlo, 2001. "Tax Evasion in a Unionised Economy," IZA Discussion Papers 382, Institute for the Study of Labor (IZA).
    5. Lee, Kangoh, 1998. "Tax Evasion, Monopoly, and Nonneutral Profit Taxes," National Tax Journal, National Tax Association;National Tax Journal, vol. 51(2), pages 333-338, June.
    6. Laszlo Goerke & Marco Runkel, 2011. "Tax evasion and competition," Scottish Journal of Political Economy, Scottish Economic Society, vol. 58(5), pages 711-736, November.
    7. David Joulfaian, 2009. "Bribes and Business Tax Evasion," European Journal of Comparative Economics, Cattaneo University (LIUC), vol. 6(2), pages 227-244, December.
    8. Sang-Ho Lee, 2006. "Tax Evasion and Monopoly Output Decisions Revisited: Strategic Firm Behavior," International Journal of Business and Economics, College of Business and College of Finance, Feng Chia University, Taichung, Taiwan, vol. 5(1), pages 83-92, April.

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