Tax Compliance Networks, Information Cascades, and Contagion Effects in Nigerian Business Communities

This doctoral study investigates the network-mediated dynamics of tax compliance behaviour in Nigerian business communities, examining how compliance and evasion decisions propagate through business social networks through information cascade and social contagion mechanisms. Standard economic models treat taxpayer compliance decisions as independent, yet ethnographic and survey evidence from Nigeria consistently suggests that compliance norms within closely networked business communities are highly correlated, implying significant network externalities in compliance behaviour. This study develops a network-theoretic model of compliance diffusion, building on the epidemiological SIR model adapted for behavioural contagion, in which taxpayers transition between compliance states partly in response to the observed compliance behaviour of their network neighbours. The model is estimated using a unique two-wave survey panel of 800 business owners in Lagos, Kano, and Port Harcourt, with network structure data collected through sociometric name generators, permitting construction of compliance influence networks for each city. Spatial econometric methods and network autocorrelation models are employed to test for compliance contagion effects, controlling for common correlated effects from shared revenue authority exposure. The study expects to find significant positive compliance contagion in dense, trust-based business networks and negative contagion in networks where high-status evasion leaders reduce the social stigma of non-compliance. Theoretical contributions include the compliance contagion model and its empirical estimation methodology. Keywords: compliance networks, social contagion, information cascades, business communities, network econometrics.