Abstract
A game-theoretical model is constructed describing the interaction of tax inspectors with taxpayers. The models allows for tax evasion and bribing of inspectors. We find the primary and secondary audit probabilities that maximize the net tax revenue for various inspector hiring strategies. The comparative revenue statics is analyzed and the optimal hiring strategy is determined as a function of the model parameters.
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Vasin, A.A., Navidi, K. Optimal Tax Inspection Strategy. Computational Mathematics and Modeling 14, 160–172 (2003). https://doi.org/10.1023/A:1022959607712
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DOI: https://doi.org/10.1023/A:1022959607712