TY  - JOUR
AU  - Jensen,Richard A.
AU  - Thursby,Jerry
AU  - Thursby,Marie
TI  - Smuggling, Camouflaging, and Market Structure
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 2630
PY  - 1991
Y2  - December 1991
UR  - http://www.nber.org/papers/w2630
L1  - http://www.nber.org/papers/w2630.pdf
N1  - Author contact info:
Richard Jensen
Dept. of Economics 
University of Notre Dame
434 Flanner Hall
Notre Dame, IN 46556
E-Mail: richard.jensen.24@nd.edu

Jerry Thursby
Georgia Institute of Technology
E-Mail: jerry.thursby@mgt.gatech.edu

Marie C. Thursby
College of Management
Georgia Institute of Technology
800 West Peachtree Street, NW
Atlanta, GA 30308-1149
Tel: 404/894-6249
Fax: 404/385-4894
E-Mail: marie.thursby@mgt.gatech.edu
AB  - We examine how market structure and enforcement affect smuggling and welfare in a model where smuggling is camouflaged by legal sales. Conditions are given for when some, but not necessarily all, firms smuggle. With camouflaging, the market price is below the price when all sales are legal, so smuggling improves welfare if the price effect outweighs excess smuggling cost. This welfare effect is directly related to the degree of competition. Increased enforcement in this model potentially reduces welfare. The model is shown to be consistent with evidence on cigarette smuggling in the United States for 1975-1982.
ER  -