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on Economic Design |
| By: | Samuel Kapon (UC Berkeley); Lucia Del Carpio (INSEAD); Sylvain Chassang (Princeton University) |
| Abstract: | Tax collection with limited enforcement capacity may be consistent with both high and low delinquency regimes: high delinquency reduces the effectiveness of threats, thereby reinforcing high delinquency. We explore the practical challenges of unraveling the high delinquency equilibrium using a mechanism design insight known as “divide-and-conquer." Our preferred mechanism takes the form of Prioritized Iterative Enforcement (PIE). Taxpayers are ranked using the ratio of expected collection to capacity use. Collection threats are issued in small batches to ensure high credibility and induce high compliance. Following repayments, liberated capacity is used to issue the next round of threats. In collaboration with a district of Lima, we experimentally assess PIE in a sample of 13, 432 property taxpayers. The data both validate and refine our theoretical framework. A semi-structural model suggests that keeping collection actions fixed, PIE would increase tax revenue by roughly 10%. |
| Keywords: | Lima, Peru; prioritized iterative enforcement, divide-and-conquer, tax collection, limited government capacity |
| JEL: | H20 |
| Date: | 2024–02 |
| URL: | https://d.repec.org/n?u=RePEc:pri:cepsud:335 |
| By: | Javier Asensio (Departament d'Economia Aplicada, Universitat Autònoma de Barcelona (UAB) & Institut d'Economia de Barcelona (IEB).); Anna Matas (Departament d'Economia Aplicada, Universitat Autònoma de Barcelona (UAB) & Institut d'Economia de Barcelona (IEB).) |
| Abstract: | Spain operates a ‘competition for the market’ system to award the regulated monopoly rights to run intercity bus services across its different regions. Such tendering system has undergone different changes since 2007. We assess the impact of those changes on different outcomes of the auctions, such as participation, submitted prices and frequencies, as well as on outcomes of the whole process in terms of prices and frequencies offered to final consumers. The results show that the design of the terms of tender can significantly modify the conditions under which bus services are operated. The weight given to price bids in the score function is shown to be a relevant variable to increase competition for the market. |
| Keywords: | Tendering, Intercity bus, Coach, Score function auctions, Spain. |
| Date: | 2024–12 |
| URL: | https://d.repec.org/n?u=RePEc:uab:wprdea:wpdea2406 |