Universität zu Köln

Balafoutas, Loukas ORCID: 0000-0002-3477-5096, Beck, Adrian, Kerschbamer, Rudolf ORCID: 0000-0002-7666-7157 and Sutter, Matthias ORCID: 0000-0002-6143-8706 (2015). The hidden costs of tax evasion. Collaborative tax evasion in markets for expert services. J. Public Econ., 129. S. 14 - 26. LAUSANNE: ELSEVIER SCIENCE SA. ISSN 0047-2727

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Abstract

We experimentally examine the impact of tax evasion attempts on the performance of credence goods markets, where contractual incompleteness results from asymmetric information on the welfare maximizing quality of the goods. Our results suggest that tax evasion attempts - independently of whether they are successful or not - lead to efficiency losses in the form of too low quality and less frequent trade. Thus, shadow economies may reduce welfare not only by inducing agents to incur costs to hide or to uncover taxable transactions, by imposing risk on uncertainty-averse tax evaders and by distorting competition, but also by creating an additional efficiency loss in the underlying market by forfeiting possible gains from trade and by inducing insufficient quality provision. We call these the hidden costs of tax evasion. (C) 2015 The Authors. Published by Elsevier By. This is an open access article under the CC BY-NC-ND license (http://creativecommons.org/licenses/by-nc-nd/4.0/).

Item Type:	Journal Article
Creators:	Creators Email ORCID ORCID Put Code Balafoutas, Loukas UNSPECIFIED orcid.org/0000-0002-3477-5096 UNSPECIFIED Beck, Adrian UNSPECIFIED UNSPECIFIED UNSPECIFIED Kerschbamer, Rudolf UNSPECIFIED orcid.org/0000-0002-7666-7157 UNSPECIFIED Sutter, Matthias UNSPECIFIED orcid.org/0000-0002-6143-8706 UNSPECIFIED
URN:	urn:nbn:de:hbz:38-395637
DOI:	10.1016/j.jpubeco.2015.06.003
Journal or Publication Title:	J. Public Econ.
Volume:	129
Page Range:	S. 14 - 26
Date:	2015
Publisher:	ELSEVIER SCIENCE SA
Place of Publication:	LAUSANNE
ISSN:	0047-2727
Language:	English
Faculty:	Faculty of Management, Economy and Social Sciences
Divisions:	Center of Excellence C-SEB
Subjects:	Economics
Uncontrolled Keywords:	Keywords Language TAXABLE INCOME; DEADWEIGHT LOSS; RATES; ECONOMICS; ELASTICITY; REPUTATION; AVERSION; IMPACT; GUILT Multiple languages Economics Multiple languages
Refereed:	Yes
URI:	http://kups.ub.uni-koeln.de/id/eprint/39563