Transfer Pricing and Ownership Structure
Tommy Gabrielsen () and
Guttorm Schjelderup ()
Norway; Department of Economics, University of Bergen from Department of Economics, University of Bergen
We study the performance of jointly owned production units where upstream firms sell inputs to a downstream final market producer. It is found that, compared to integrated firms, co-ownership leads to overinvoicing of input prices (transfer prices), resulting in lower aggregate profits. Tax and tariff policy may lessen the organizational inefficiencies of jointly owned firms. The analysis suggests that firms must have other reasons for forming jointly owned production units than those guided by production efficiency and benefits from delegation of decision-making.
Keywords: PRICES; INTERNATIONAL AFFAIRS; OWNERSHIP (search for similar items in EconPapers)
JEL-codes: F23 L23 (search for similar items in EconPapers)
Pages: 15 pages
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Journal Article: Transfer Pricing and Ownership Structure (1999)
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Persistent link: https://EconPapers.repec.org/RePEc:fth:bereco:202
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More papers in Norway; Department of Economics, University of Bergen from Department of Economics, University of Bergen Department of Economics, University of Bergen Fosswinckels Gate 6. N-5007 Bergen, Norway. Contact information at EDIRC.
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