a b s t r a c tThis paper incorporates the positive relationship between tax compliance and tax morale into the social welfare function and derives the optimal tax policy in the presence of honest taxpayers and tax evaders. The right mix of policy instruments of deterrence for clamping down on tax evasion depends on taxpayers' morality. Monitoring turns out to be an effective tool for controlling illegal activities, thus a tighter audit is recommended in any case. For honest taxpayers, this increase in monitoring should be offset by tax reductions. In contrast, in the case of tax evaders, the increase in monitoring should be accompanied by higher penalties.
Purpose
The purpose of this paper is to comment upon the use of hedonic pricing models for the valuation of property. This model can be particularly useful for some housing markets.
Design/methodology/approach
This Education Briefing is an explanation of the how hedonic pricing can be useful in looking at the effect of “location” on the house prices within different submarkets using the Italian real estate market as an example.
Findings
Although, this case study is relatively straightforward, it shows how the application of the market approach can provide insights in cases where the comparable properties belong to different submarkets with relatively few transactions.
Practical implications
In cases of mass appraisals, hedonic pricing models can provide a broad indication of value across submarkets.
Originality/value
This paper develops a general framework that connects multiple regression analysis, direct comparison model and submarket binary variables.
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