A BEJEAP Contributions article.

Abstract

This paper provides a new approach to the evaluation of pre-shipment inspection (PSI) programs as ways of improving tariff-revenue collection and reducing fraud when customs administrations are corrupt. We build a model highlighting the contribution of private surveillance firms to the generation of information and describing how incentives for underinvoicing and collusive behaviour between importers and customs are affected by the introduction of PSI. It is shown theoretically that the introduction of PSI has an ambiguous effect on the level of fraud. Empirically, our econometric results suggest that the introduction of PSI services increased underinvoicing in Argentina and Indonesia, and reduced it in the Philippines.

Submitted: April 5, 2006 · Accepted: June 15, 2006 · Published: December 3, 2006

Originally published in Contributions to Economic Analysis & Policy.

Recommended Citation

Anson, Jose; Cadot, Olivier; and Olarreaga, Marcelo (2006) "Tariff Evasion and Customs Corruption: Does Pre-Shipment Inspection Help?," Contributions to Economic Analysis & Policy: Vol. 5 : Iss. 1, Article 33.
Available at: http://www.bepress.com/bejeap/contributions/vol5/iss1/art33