Premium
TARIFFS AND IMPORTS MISINVOICING UNDER OLIGOPOLY
Author(s) -
BISWAS AMIT K.,
SENGUPTA SARBAJIT
Publication year - 2011
Publication title -
economics and politics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.822
H-Index - 45
eISSN - 1468-0343
pISSN - 0954-1985
DOI - 10.1111/j.1468-0343.2011.00384.x
Subject(s) - tariff , subsidy , international economics , oligopoly , economic interventionism , economics , developing country , international trade , government (linguistics) , export subsidy , market access , intervention (counseling) , business , commercial policy , market economy , economic growth , welfare , psychology , linguistics , philosophy , psychiatry , politics , political science , law , ecology , biology , agriculture
Mismatch of trade statistics between developed and developing countries indicate a substantial misinvoicing of trade figures, primarily by developing country traders. This is due to the inflexible exchange rate regimes, severe import restrictions and export subsidies prevailing in Less Developed Countries (LDCs). In this paper, we focus on import underinvoicing due to high tariff barriers in a market where domestic producers compete with importers. Specifically, we examine how tariff levels, market structure and government intervention (in the form of intensity of monitoring and severity of penalties) affect the levels of underinvoicing. We also look at the optimal levels of import tariff and instruments of government intervention in these circumstances.