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Discretionary policy, strategic complementarity and tax evasion. A strategic analysis of the Italian audit mechanism

  • Bruno Chiarini
  • Simona Monteleone

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.

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Paper provided by D.E.S. (Department of Economic Studies), University of Naples "Parthenope", Italy in its series Discussion Papers with number 4_2011.

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Date of creation: 29 Apr 2011
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Handle: RePEc:prt:dpaper:4_2011
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  1. Ernst Fehr & Jean-Robert Tyran, . "Individual Irrationality and Aggregate Outcomes," IEW - Working Papers 252, Institute for Empirical Research in Economics - University of Zurich.
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