Various nations combat transportation-related environmental effects through fuel efficiency standards and subsidies for hybrid/electric vehicles. Similarly, energy ratings aid consumers in making informed choices for large appliances. Extending this idea to automobiles, a labeling system could inform buyers about environmental impacts, potentially influencing demand akin to environmental subsidies. Israel's 2009 reform, assigning automobiles a "green score" dictating differential taxes and mandated reporting, prompted consumers to favor less environmentally damaging vehicles. About 75% of the shift resulted from price reductions, with information provision accounting for the remaining 25%. Notably, subsidies were less likely to impact models favored by lower socioeconomic groups, indicating the reform's regressive nature.

To show whether tax avoidance makes large firms even larger, we exploit the impact of the country-by-country reporting reform on multinationals in a difference-in-differences approach. We find that increased tax compliance following the reform reduces the size of large multinationals. Specifically, a one percentage point rise in effective tax rates results in a 2.3% decrease in sales. We also show a sales decline in subsidiaries owned by multinationals subject to the reform compared to those exempt; and a decrease in concentration in industries where the top firms are subject to the reform. These findings highlight the potential of tax compliance reforms in fostering competition.

This paper investigates the response and welfare implication of firms to a size-dependent enforcement policy using Expend Paper Review (EPR) in Taiwan. With the policy threshold at 30 million New Taiwan Dollars (NTD), firms are incentivized to lower reported revenue via under-reporting (evasion), revenue-shifting (avoidance), or production reduction. Leveraging a novel combination of detailed tax returns and census survey data, our empirical focus examines how firms strategically bunch below the threshold, displaying diverse behavioral responses shaped by transaction tractability. Downstream industries mainly under-report B2C transactions, decreasing reported revenue by 0.56 million NTD. Conversely, upstream sectors reported lower revenue by 1.1 million NTD. Of this, 50\% was due to production reduction, highlighting misallocation sources and associated efficiency loss. Another 40\% is primarily contributed to B2B revenue-shifting among affiliated firms within ownership networks. Structural welfare estimation further implies that size-based tax enforcement has a broader impact on real economic efficiency beyond revenue considerations.