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This happens with cargo vans in the US, which are imported as passenger vans before being converted, to avoid a 25% tarrif on the import of cargo vans. http://

This happens with cargo vans in the US, which are imported as passenger vans before being converted, to avoid a 25% tarrif on the import of cargo vans. http://blog.caranddriver.com/feds-watching-fords-run-around-on-chicken-tax-riles-customs-officials/ http://blog.caranddriver.com/feds-watching-fords-run-around-... However I'd challenge that this is a market failure - this is an example of the failure of a rules-based approach to regulation. In countries which take a principles-based approach to regulation then the substance of the transation is considered as well as the form. So this kind of nit-picking to circumnavigate the rules wouldn't have been allowed.

avar 9y ago
What would you call it then? Market failures can also be created by ineffective regulation, as is the case in my example. Considering the substance of the transaction isn't a viable strategy, it might be possible at larger scales as in your Ford example, but individuals can and will find clever ways around tariffs that are impossible for the authorities to keep up with. As an example, I lived in a European country where import tolls on bicycles were much higher than the import fees on spare parts, so if the price of shipping was low enough you could simply ask the seller to send over a bike in multiple packages marked as spare parts to evade the import fees. How are you going to detect cases like that with perfect accuracy? You'd need some massive tracking system to figure out who bought what, and even then it could be trivially evaded by me and a friend buying 1/2 of two bikes each as spare parts and combining them after they've been imported.