INCENTIVE COMPATIBLE REGULATION OF A FOREIGN-OWNED SUBSIDIARY

• 成果类型: Article
• 署名作者: GRESIK, TA; NELSON, DR
• 署名单位: Tulane University
• 刊物名称: JOURNAL OF INTERNATIONAL ECONOMICS
• ISSN/ISSBN: 0022-1996
• DOI: 10.1016/0022-1996(94)90006-X
• 发表日期: 1994
• 页码: 309-331
• 关键词: TRANSFER PRICES; MULTINATIONAL REGULATION; incentive compatibility

摘要

Transfer prices are administered charges for intra-firm transfers of factors of production. For a multinational firm, transfer prices for international transfers provide the means to redistribute costs and increase global profits given variations in national tax and profit repatriation policies. Local regulation of a subsidiary may thus be necessary to limit the welfare costs of strategic transfer pricing. Prusa (Journal of International Economics, 1990, 28, 155-172) characterizes the welfare-maximizing regulations for a monopoly subsidiary that induce the firm to report transfer prices truthfully. We show, however, that it can be more efficient to implement regulations that encourage the firm to misrepresent its true transfer costs.