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Tax compliance and firms' strategic interdependence

By Ralph Bayer and Frank Cowell

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 interdependence of firms. 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 firms in both dimensions

Topics: HB Economic Theory
Publisher: Elsevier
Year: 2009
DOI identifier: 10.1016/j.jpubeco.2009.07.007
OAI identifier: oai:eprints.lse.ac.uk:35804
Provided by: LSE Research Online
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