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Empowering consumers to reduce corporate tax avoidance: Theory and Experiments
[working paper]
Corporate Editor
Institut für Höhere Studien (IHS), Wien
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 disclosu... view more
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.... view less
Keywords
laboratory experiment; transparency; enterprise; taxes; taxation; tax policy; corporate tax; consumer
Classification
National Economy
Public Finance
Free Keywords
tax avoidance; policy measure; tax rating
Document language
English
Publication Year
2020
City
Wien
Page/Pages
47 p.
Series
IHS Working Paper, 21
Status
Published Version; reviewed