Can Enforcement Backfire? Crime Displacement in the Context of Customs Reform in the Philippines

Increased enforcement can displace crime to alternative lawbreaking methods. This paper examines a customs reform in the Philippines that raised enforcement against a specific method of avoiding import duties. Increased enforcement applied only to shipments from some countries, so shipments from other countries serve as a control group. Increased enforcement reduced the targeted duty-avoidance method, but caused substantial displacement to an alternative method. The hypothesis of zero change in total duty avoidance cannot be rejected. Displacement was greater for products with higher tariff rates and import volumes, consistent with the existence of fixed costs of switching to alternative duty-avoidance methods.