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This paper presents a simple model to evaluate alternative payment schemes for tax inspectors in the presence of corruption. The authors consider problems of both moral hazard, whic h arises because taking bribes cannot be observed without costly monitoring, and adverse selection, since not all...
Persistent link: https://www.econbiz.de/10005072211
In a simple model of evadable indirect taxation, some surprises emerge. Because of a 'market-thinning' effect of high prices, high taxes induce multiple equilibria (low-price black markets and high-price legal markets). Further, evadability introduces a bifurcation to optimal taxation: for less...
Persistent link: https://www.econbiz.de/10005393099