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Tax Compliance and Firms' Strategic Interdependence

Author

Listed:
  • Ralph-C Bayer

    (School of Economics, University of Adelaide)

  • Frank Cowell

    (London School of Economics)

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. In the market firms may compete in terms of either output or price. 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.

Suggested Citation

  • Ralph-C Bayer & Frank Cowell, 2006. "Tax Compliance and Firms' Strategic Interdependence," School of Economics and Public Policy Working Papers 2006-09, University of Adelaide, School of Economics and Public Policy.
    • Handle: RePEc:adl:wpaper:2006-09
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    References listed on IDEAS

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    More about this item

    Keywords

    tax compliance; evasion; oligopoly;
    All these keywords.

    JEL classification:

    • H20 - Public Economics - - Taxation, Subsidies, and Revenue - - - General
    • H21 - Public Economics - - Taxation, Subsidies, and Revenue - - - Efficiency; Optimal Taxation

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