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Minority Ownership, Deferral, Perverse Intrafirm Trade And Tariffs

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Author Info
CHANDER KANT
Abstract

When the foreign subsidiary has minority local ownership and the MNF engages in transfer pricing, its intrafirm exports are always from the country with the higher marginal cost. Further, permitting deferral from home taxation of non-repatriated foreign profits changes the nature of intrafirm trade from efficient to perverse even when the foreign subsidiary is fully-owned by the MNF. Intrafirm trade differs significantly from that between unrelated buyers and sellers, and tariffs on such trade (when it is perverse) can restore global production efficiency. [F12]

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Publisher Info
Article provided by Korean International Economic Association in its journal International Economic Journal.

Volume (Year): 9 (1995)
Issue (Month): 1 (April)
Pages: 19-37
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Handle: RePEc:taf:intecj:v:9:y:1995:i:1:p:19-37

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References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:

  1. Kaz Miyagiwa, 1992. "International Shareholdings And Strategic Export Policy," International Economic Journal, Korean International Economic Association, vol. 6(3), pages 37-42, October. [Downloadable!] (restricted)
    Other versions:
  2. Markusen, James R., 1984. "Multinationals, multi-plant economies, and the gains from trade," Journal of International Economics, Elsevier, vol. 16(3-4), pages 205-226, May. [Downloadable!] (restricted)
  3. Horstmann, Ignatius J & Markusen, James R, 1989. "Firm-Specific Assets and the Gains from Direct Foreign Investment," Economica, London School of Economics and Political Science, vol. 56(221), pages 41-48, February. [Downloadable!] (restricted)
  4. Ethier, Wilfred J. & Horn, Henrik, 1990. "Managerial control of international firms and patterns of direct investment," Journal of International Economics, Elsevier, vol. 28(1-2), pages 25-45, February. [Downloadable!] (restricted)
  5. Lorraine A. B. Eden, 1978. "Vertically Integrated Multinationals: A Microeconomic Analysis," Canadian Journal of Economics, Canadian Economics Association, vol. 11(3), pages 534-46, August. [Downloadable!] (restricted)
  6. Lee, Sanghack, 1990. "International equity markets and trade policy," Journal of International Economics, Elsevier, vol. 29(1-2), pages 173-184, August. [Downloadable!] (restricted)
  7. Katrak, Homi, 1980. "Multi-National Monopolies and Monopoly Regulation," Oxford Economic Papers, Oxford University Press, vol. 32(3), pages 453-66, November. [Downloadable!] (restricted)
  8. Kant, Chander, 1988. "Endogenous transfer pricing and the effects of uncertain regulation," Journal of International Economics, Elsevier, vol. 24(1-2), pages 147-157, February. [Downloadable!] (restricted)
  9. Horstmann, Ignatius J & Markusen, James R, 1987. "Strategic Investments and the Development of Multinationals," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 28(1), pages 109-21, February. [Downloadable!] (restricted)
  10. Batra, Raveendra N & Ramachandran, Rama, 1980. "Multinational Firms and the Theory of International Trade and Investment," American Economic Review, American Economic Association, vol. 70(3), pages 278-90, June. [Downloadable!] (restricted)
  11. Ethier, Wilfred J, 1986. "The Multinational Firm," The Quarterly Journal of Economics, MIT Press, vol. 101(4), pages 805-33, November. [Downloadable!] (restricted)
  12. Takao Itagaki, 1981. "The Theory of the Multinational Firm under Exchange Rate Uncertainty," Canadian Journal of Economics, Canadian Economics Association, vol. 14(2), pages 276-97, May. [Downloadable!] (restricted)
  13. Kant, Chander, 1990. "Multinational firms and government revenues," Journal of Public Economics, Elsevier, vol. 42(2), pages 135-147, July. [Downloadable!] (restricted)
  14. Katrak, Homi, 1977. "Multi-national Monopolies and Commercial Policy," Oxford Economic Papers, Oxford University Press, vol. 29(2), pages 283-91, July. [Downloadable!] (restricted)
  15. Horst, Thomas, 1971. "The Theory of the Multinational Firm: Optimal Behavior under Different Tariff and Tax Rates," Journal of Political Economy, University of Chicago Press, vol. 79(5), pages 1059-72, Sept.-Oct. [Downloadable!] (restricted)
  16. Helpman, Elhanan, 1984. "A Simple Theory of International Trade with Multinational Corporations," Journal of Political Economy, University of Chicago Press, vol. 92(3), pages 451-71, June. [Downloadable!] (restricted)
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Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Kimberly A. Clausing, 1998. "The Impact of Transfer Pricing on Intrafirm Trade," NBER Working Papers 6688, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  2. Hans-Werner Sinn & Alfons Weichenrieder, 1997. "Foreign Direct Investment, Political Resentment and the Privatization Process in Eastern Europe," CESifo Working Paper Series CESifo Working Paper No. , CESifo Group Munich. [Downloadable!]
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