A1 - Julien Martin
A1 - Mathieu Parenti
A1 - Farid Toubal
TI - Corporate tax avoidance and industry concentration
IS - 2020-09
T3 - Working Papers
KW - Tax Avoidance
KW - Industry Concentration
KW - IRS Audit Probability
N2 -
This paper argues that tax avoidance by large corporations has contributed to the 25% increase in concentration among U.S. firms since the mid-1990s. Corporate tax avoidance gives large firms a competitive edge, which translates into larger market shares and an increase in the granularity of the economy. We develop IV and difference-in-differences strategies that show the causal impact of tax avoidance on firm-level sales. Had firms not resorted to tax avoidance in 2017, our results imply that the average industry concentration would have been 8.3% lower, which is around its early 2000 level.

ER -