Collective action problem. Free rider: tax evasion

Abstract

This literature review examines the collective action and free riding but focuses especially on tax evasion, very current topic which seems to be a growing problem in almost all countries. An introduction to this Degree Final Project is followed by explaining the definitions and the purpose of the collective action. The rationality and differences in the size group are also undertaken. After that free riding is analyzed, especially economic losses caused by this problem and possible solutions. The main part focuses on tax evasion, to be more precise, explains why do we have to pay taxes and why people try to evade them. At the end of this section the tax situation in Spain is shortly described and possible solutions are given.