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

Author

Listed:
  • Dean Yang

    (Gerald R. Ford School of Public Policy and Department of Economics, University of Michigan; Bureau for Research and Economic Analysis of Development (BREAD); and National Bureau of Economic Research (NBER))

Abstract

Increased enforcement can displace crime to alternative lawbreaking methods. This paper examines a customs reform in the Philippines that raised enforcement against a specific method of avoiding import duties. Increased enforcement applied only to shipments from some countries, so shipments from other countries serve as a control group. Increased enforcement reduced the targeted duty-avoidance method, but caused substantial displacement to an alternative method. The hypothesis of 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. Copyright by the President and Fellows of Harvard College and the Massachusetts Institute of Technology.

Suggested Citation

  • Dean Yang, 2008. "Can Enforcement Backfire? Crime Displacement in the Context of Customs Reform in the Philippines," The Review of Economics and Statistics, MIT Press, vol. 90(1), pages 1-14, February.
    • Handle: RePEc:tpr:restat:v:90:y:2008:i:1:p:1-14
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    JEL classification:

    • D73 - Microeconomics - - Analysis of Collective Decision-Making - - - Bureaucracy; Administrative Processes in Public Organizations; Corruption
    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • H26 - Public Economics - - Taxation, Subsidies, and Revenue - - - Tax Evasion and Avoidance
    • K42 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior - - - Illegal Behavior and the Enforcement of Law
    • O23 - Economic Development, Innovation, Technological Change, and Growth - - Development Planning and Policy - - - Fiscal and Monetary Policy in Development

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