Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/101104
Authors: 
Balafoutas, Loukas
Beck, Adrian
Kerschbamer, Rudolf
Sutter, Matthias
Year of Publication: 
2014
Series/Report no.: 
Working Papers in Economics and Statistics 2014-01
Abstract: 
In markets where transactions are governed by contractual incompleteness, revealed intentions to evade taxes may affect market performance. We experimentally examine the impact of tax evasion attempts on the performance of credence goods markets, where contractual incompleteness results from asymmetric information on the welfare maximizing quality of the good. We find that tax evasion attempts - independently of whether they are successful or not - lead to efficiency losses in the form of too low quality and less frequent trade. Thus, shadow economies induce an excess burden not only by hampering the collection of tax revenues, but also by reducing market efficiency.
Subjects: 
Credence Goods
Expert Services
Tax Evasion
Fraud
Experiment
JEL: 
C72
C91
D82
H26
Document Type: 
Working Paper

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