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Discretionary policy, strategic complementarity and tax evasion: a strategic analysis of the Italian audit mechanism

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  • Bruno Chiarini

    (University of Naples Parthenope)

  • Simona Monteleone

    (University of Catania)

Abstract

Underlying this work is the idea that there is a problem of strategic complementarity of individuals who choose to evade. Complementarity results from the discretionary policies of governments and the strategic implications of the Studi di Settore (sector studies), the mechanism used in Italy to evaluate the income (in reality, the turnover) of professional categories and small firms. In the Italian case, policy discretion and the sector studies lead to a failure of the coordination mechanism of taxpayers and confer a strong advantage for the coordination mechanism of tax evaders. The outcome is a coordination failure where individuals converge to the least efficient equilibrium from a social perspective.

Suggested Citation

  • Bruno Chiarini & Simona Monteleone, 2016. "Discretionary policy, strategic complementarity and tax evasion: a strategic analysis of the Italian audit mechanism," Economia Politica: Journal of Analytical and Institutional Economics, Springer;Fondazione Edison, vol. 33(1), pages 99-117, April.
    • Handle: RePEc:spr:epolit:v:33:y:2016:i:1:d:10.1007_s40888-016-0024-4
    DOI: 10.1007/s40888-016-0024-4
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    Cited by:

    1. Busato, Francesco & Chiarini, Bruno & Rey, Guido M., 2012. "Equilibrium implications of fiscal policy with tax evasion: A long run perspective," International Review of Law and Economics, Elsevier, vol. 32(2), pages 197-214.
    2. Amedeo Argentiero & Bruno Chiarini & Elisabetta Marzano, 2020. "Does Tax Evasion Affect Economic Crime?," Fiscal Studies, John Wiley & Sons, vol. 41(2), pages 441-482, June.

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    More about this item

    Keywords

    Tax evasion; Tax compliance; Audit selection mechanism; Complementarity;
    All these keywords.

    JEL classification:

    • H26 - Public Economics - - Taxation, Subsidies, and Revenue - - - Tax Evasion and Avoidance
    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games

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