Transfer Pricing by U.S.-Based Multinational Firms

Andrew Bernard, J. Jensen () and Peter Schott

No 12493, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: This paper examines how prices set by multinational firms vary across arm's-length and related-party customers. Comparing prices within firms, products, destination countries, modes of transport and month, we find that the prices U.S. exporters set for their arm's-length customers are substantially larger than the prices recorded for related-parties. This price wedge is smaller for commodities than for differentiated goods, is increasing in firm size and firm export share, and is greater for goods sent to countries with lower corporate tax rates and higher tariffs. We also find that changes in exchange rates have differential effects on arm's-length and related-party prices; an appreciation of the dollar reduces the difference between the prices.

JEL-codes: F14 F23 H25 H26 H32 (search for similar items in EconPapers)
Date: 2006-08
New Economics Papers: this item is included in nep-cse, nep-int and nep-pbe
Note: IO ITI PE
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Citations: View citations in EconPapers (112)

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Working Paper: Transfer Pricing by U.S.-Based Multinational Firms (2008)
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