Profit-shifting in Two-sided Markets

Dirk Schindler () and Guttorm Schjelderup ()

No 2009/1, Discussion Papers from Department of Finance and Management Science, Norwegian School of Economics and Business Administration

Abstract: We investigate how multinational two-sided platform firms set their prices on intra firm transactions. Two-sided platform firms derive income from two customer groups that are connected through at least one positive network externality from one group to the other. A main finding is that even in the absence of taxation transfer prices deviate from marginal cost of production. A second result of the paper is that it is inherently difficult to establish arm's length prices in two-sided markets. Finally, we find that differences in national tax rates may be welfare enhancing despite the use of such prices as a profit shifting device.

Keywords: Multinational enterprises; two-sided markets; profit shifting (search for similar items in EconPapers)
JEL-codes: D21 L24 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-bec, nep-mic, nep-mkt and nep-net
Date: 2009-04-14
View list of references

Downloads: (external link)
http://www.nhh.no/Admin/Public/DWSDownload.aspx?fi ... for/dp/2009/0109.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: http://EconPapers.repec.org/RePEc:hhs:nhhfms:2009_001

Access Statistics for this paper

More papers in Discussion Papers from Department of Finance and Management Science, Norwegian School of Economics and Business Administration
Address: NHH, Department of Finance and Management Science, Helleveien 30, N-5045 Bergen, Norway
Contact information at EDIRC.
Series data maintained by Stein Fossen ().