Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/223415
Authors: 
Fatas, Enrique
Morales, Antonio J.
Sonntag, Axel
Year of Publication: 
2020
Series/Report no.: 
IHS Working Paper No. 21
Publisher: 
Institut für Höhere Studien - Institute for Advanced Studies (IHS), Vienna
Abstract: 
We analyze corporate tax avoidance in a theoretical model and in a stylized experimental Bertrand setting in which symmetric firms and consumers sell and buy a homogeneous product, when human participants make decisions as firms and consumers. We investigate how market power and information disclosure of firms' tax avoidance behavior impacts corporate tax avoidance and market competition. By imposing a tax rating, corporate tax behavior becomes more transparent, and consumers actively and costly boycott firms that do not pay their taxes. Firms adapt and anticipate consumer boycotts and increase tax payments, and prices. When rating disclosure is voluntary, the positive effect on corporate tax compliance vanishes in large markets.
Subjects: 
tax avoidance
policy measure
tax rating
transparency
lab experiment
JEL: 
H26
C92
D78
D82
L15
Creative Commons License: 
https://creativecommons.org/licenses/by/4.0/
Document Type: 
Working Paper

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