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Full-Text Articles in Social and Behavioral Sciences
The Effect Of Enforcement And Taxes In A Joint Export, Scott Fausti
The Effect Of Enforcement And Taxes In A Joint Export, Scott Fausti
Economics Staff Paper Series
This paper proposes a model of joint product smuggling which explicitly examines the roles of uncertainty, enforcement, taxes, and the magnitude of a real resource cost in determining the firm's decision to smuggle and smuggling's impact on welfare and tax revenue collection. A framework is presented in which: 1) the tax rate, 2) the level of government enforcement, and 3) the real resource cost are analyzed to determine their impact on a firm's decision to smuggle or engage in strictly legal trade. The results derived in the paper indicate that the implied policy solution for the smuggling problem arrived at …
The Effect Of Uncertainty On A Joint Product Model Of Smuggling, Scott Fausti
The Effect Of Uncertainty On A Joint Product Model Of Smuggling, Scott Fausti
Economics Staff Paper Series
Extending the seminal work of Bhagwati and Hansen (1973) on smuggling, Pitt (1981) developed a joint export smuggling model to investigate the welfare effect of illegal transactions. This paper develops an extension of Pitt's original model which allows many of the interesting features of the Bhagwati and Hansen model to be reexamined within a joint product model of smuggling framework. The extension is made through the following modifications to Pitt's assumptions: 1) firms that export are free to engage in joint product smuggling or strictly legal trade; and 2) uncertainty is introduced into the model via active government enforcement. The …