Transfer prices and the structure of intra-firm trade

Vibhas Madan

Canadian Journal of Economics, 2000, vol. 33, issue 1, 53-68

Abstract: In this paper the structure of intra-firm trade within the context of transfer price manipulation by a multinational firm is endogenized. "High" and "low" values of host-country tax rates give rise to intra-firm trade in final goods and intermediate inputs, and "intermediate" values of the tax rate are associated with intra-firm trade in either the intermediate inputs or the final goods only. Higher tariffs and stricter local content restrictions bias intra-firm trade towards intermediate-good trade and final-good trade, respectively. In the presence of endogenous transfer prices host-country sales may increase if the multinational faces stricter trade restrictions and higher host-country tax rates.

JEL-codes: F12 F23 (search for similar items in EconPapers)
Date: 2000
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Citations: View citations in EconPapers (7)

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