RESEARCH NOTES

369

The Underground Economy and Organized Crime in Transition Economies GERALD P. W. SIMONS

Grand Valley State University--U.S.A.

This paper shows that in an imperfect information game with government-Mafia tax competition, the government benefits from the presence of crime organizations in the subgame perfect, time-consistent equilibrium. This paper analyzes the impact that organized crime has on production in the formal and informal sectors, as well as on government tax rates. Most existing models include assumptions of complete information on the part of businesses: firms make their profit-maximizing decisions (about price, production, tax evasion, and the like) under known levels of government taxation and known levels of Mafia extortion. In reality, there is considerable uncertainty on the part of the firm. To address this, a multi-player, multi-stage game is developed from that of Osborne [ 1998] in which a representative firm must make formal and informal production decisions before the degree of Mafia extortion is known with certainty. Thus, the opportunity exists for the Mafia to alter its level of revenue extortion after the firm has decided by how much to evade official government taxes. A subgame perfect (hence, time-consistent) equilibrium is solved and compared with the outcomes when there is no prior uncertainty and when organized crime is not present. (JEL O10)

Economic Impact of Entrepreneurship Training in Rural America DEBBY LINDSEY AND SAFDAR MUHAMMAD

Howard University and Tennessee State University--U.S.A.

This study is designed to investigate the potential impact of entrepreneurship training on the economic position of rural citizens and their readiness for business ownership and reveals that entrepreneurship can have a positive impact on the ecomonic advancement of rural communities. Participants' perception of their readiness for business ownership included an assessment of personal characteristics. Participants reported that they possessed the characteristics of having skills and knowledge in their field, creativity, and experience. Participants were not seeking full-timejobs. Their aspirations and goals were high. They wanted to make a better life for themselves and their children by entering into self-employment. Most participants did not plan to enter into a new venture full-time, at least not initially. Rural citizens in this study believed that entrepreneurship and small business programs could improve their economic status. This involves generating knowledge and wealth as well as improving standards of living. They agreed that training and consulting sessions should be major components of their preparedness for self-employment. (JEL O10)

Accounting Needs of Rural Entrepreneurs EMMANUEL ONIFADE AND JAMES ELLZY

Morehouse College and Tennessee State University--U.S.A.

The results of this study showed that accounting needs of surveyed rural entrepreneurs were similar to the accounting information needs of other business owners. However, three of the main areas where this group of entrepreneurs had problems were in budgeting, payroll, and bookkeeping. Furthermore, information gathered during town meetings and seminars showed that this group of rural entrepreneurs believed that small business programs could improve their chances of success. Aspiring entrepreneurs failed to include owner-employee compensation in their budget provisions. Participants had problems with payroll tax deposit requirements, and bookkeeping was seen as a simple job that anyone could handle. Theory holds that accounting is the framework from which all decisions are made. The objective of this study was to investigate the accounting needs of business owners and aspiring business owners. The intent of this research was to contribute to an overall plan to improve the success rate of newly developed,