Joint Ventures and Transfer Pricing Rivalry

Tommy Staahl Gabrielsen () and Guttorm Schjelderup ()

Working Papers from Norwegian School of Economics and Business Administration-

Abstract: The paper studies the performance of joint ventures where upstreams firms sell inputs to a production joint venture. It is found that joint ventures lead to overinvoicing of input prices (tranfer prices) compared to integrated firms resulting in lower aggregate profits. Tax and tariff policy may improve the organizational inefficiencies of joint ventures. The analysis suggests that firms must have other reasons for forming joint ventures than those guided by production efficiency and benefits from delegation of decision-making.

Keywords: PRICING; JOINT VENTURES (search for similar items in EconPapers)
JEL-codes: L22 L23 (search for similar items in EconPapers)
Date: 1998

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Working Paper: Joint Ventures and Transfer Pricing Rivalry (1998)
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Persistent link: http://EconPapers.repec.org/RePEc:fth:norgee:10/98

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