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Tax compliance and firms' strategic interdependence

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  • Bayer, R
  • Cowell, Frank

Abstract

We focus on a relatively neglected area of the tax-compliance literature in economics, the behaviour of firms. We examine the impact of alternative audit rules on receipts from a tax on profits in the context of strategic inter- dependence of firms. In the market firms may compete in terms of either output or price. The enforcement policy can have an effect on firms behaviour in two dimensions - their market decisions as well as their compliance behaviour. An appropriate design of the enforcement policy can thus have a "double dividend" by manipulating firm in both dimensions.

Suggested Citation

  • Bayer, R & Cowell, Frank, 2006. "Tax compliance and firms' strategic interdependence," LSE Research Online Documents on Economics 2680, London School of Economics and Political Science, LSE Library.
    • Handle: RePEc:ehl:lserod:2680
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    More about this item

    Keywords

    Tax compliance; evasion; oligopoly;
    All these keywords.

    JEL classification:

    • H21 - Public Economics - - Taxation, Subsidies, and Revenue - - - Efficiency; Optimal Taxation
    • H20 - Public Economics - - Taxation, Subsidies, and Revenue - - - General

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