"People who import cars to Ukraine sometimes [pay to have] the car cut in two separate pieces and carry it through customs this way (see photo). By doing this, they save a fortune on import tax. A car carried in two pieces is seen as spare parts and therefore is taxed at a much lower rate than a normal car. When in Ukraine, the [owner pays to have the] car welded back into one piece."
MP: The economic lessons here are: a) people respond to incentives, b) if you tax something, you get less of it, and c) taxes (and regulations) are distortionary because people change their behavior to find ways around them.
HT: Tyler Cowen via Pete Friedlander
Post Title
→Markets in Everything: Cutting Cars in Half
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→https://manufacturing-holdings.blogspot.com/2011/08/markets-in-everything-cutting-cars-in.html
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