Strategic Incentives for Keeping One Set of Books in International Transfer Pricing

Oliver M. Dürr and Robert Göx

Journal of Economics & Management Strategy, 2011, vol. 20, issue 1, 269-298

Abstract: We study the equilibrium accounting and transfer pricing policies in a multinational duopoly with price competition in the final product market. We find that the firms in a duopoly can benefit from strategically using the same transfer price for tax and managerial purposes instead of using separate transfer prices for both objectives. According to our results, the practice of one set of books should be the prevalent accounting method in markets with a small number of competitors and similar products.

Date: 2011
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https://doi.org/10.1111/j.1530-9134.2010.00289.x

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Persistent link: https://EconPapers.repec.org/RePEc:bla:jemstr:v:20:y:2011:i:1:p:269-298

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