This paper presents evidence of market externalities of tax evasion: firms' tax non-compliance distorts the outcomes of … their competitors. Using novel administrative data on the universe of Italian firms, we compute a tax evasion proxy as the … worsening of allocative efficiency. Our findings show that cracking down on tax evasion not only increases tax revenue and …

applied, considering factors such company size, sector, location, and tax evasion fines. The study included data from 11 …,297 firms established in 2017, in Rio Grande do Sul, Brazil. The findings indicate that companies fined for tax evasion had a …