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The role of agents in fraudulent activities: Evidence from the housing market in Beijing

Author

Listed:
  • Agarwal, Sumit
  • Kuang, Weida
  • Wang, Long
  • Yang, Yang

Abstract

This study examines the role played by real estate agents in fraudulent activities in China’s housing market. We show that agents contribute to the formation of Yin–Yang contracts and the magnitude of resulting tax evasion through two possible mechanisms: the learning-by-doing effect and the peer effect. Agents’ cumulative experience allows them to discover local registration authorities’ monitoring capability and strategically register prices close to the internal guideline prices. Moreover, agents’ involvement in tax evasion is significantly affected by the tax evasion behaviors of their peers. The difference-in-differences analyses across two policy shocks show that the involvement of experienced real estate agents exacerbates the magnitude of tax evasion during periods of frequent government policy adjustments.

Suggested Citation

  • Agarwal, Sumit & Kuang, Weida & Wang, Long & Yang, Yang, 2024. "The role of agents in fraudulent activities: Evidence from the housing market in Beijing," Journal of Urban Economics, Elsevier, vol. 142(C).
    • Handle: RePEc:eee:juecon:v:142:y:2024:i:c:s009411902400038x
    DOI: 10.1016/j.jue.2024.103668
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    Cited by:

    1. Guoying Deng & Xuyuan Zhang, 2024. "Platform-Mediated Consolidation and Offline Store Expansion: Evidence from Real Estate Brokerages in Major Chinese Cities," Papers 2409.04326, arXiv.org.

    More about this item

    Keywords

    Tax evasion; Real estate agent; Housing market; Learning-by-doing;
    All these keywords.

    JEL classification:

    • R21 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Housing Demand
    • R28 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Government Policy
    • H26 - Public Economics - - Taxation, Subsidies, and Revenue - - - Tax Evasion and Avoidance
    • R30 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - General

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