Joint Ventures and Transfer Pricing Rivalry

Tommy Gabrielsen and Guttorm Schjelderup

Norway; Department of Economics, University of Bergen from Department of Economics, University of Bergen

Abstract: The paper studies the performance of joint ventures where upstream firms sell inputs to a production joint venture. It is found that joint ventures lead to overinvoicing of input prices (transfer 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: L10 L22 (search for similar items in EconPapers)
Pages: 27 pages
Date: 1998
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Working Paper: Joint Ventures and Transfer Pricing Rivalry (1998)
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Persistent link: https://EconPapers.repec.org/RePEc:fth:bereco:0898

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