Joint Ventures and Transfer Pricing Rivalry
AbstractThe 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.
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Bibliographic InfoPaper provided by Department of Economics, University of Bergen in its series Norway; Department of Economics, University of Bergen with number 0898.
Length: 27 pages
Date of creation: 1998
Date of revision:
Contact details of provider:
Postal: Department of Economics, University of Bergen Fosswinckels Gate 6. N-5007 Bergen, Norway
Web page: http://www.uib.no/econ/
More information through EDIRC
PRICING ; JOINT VENTURES;
Other versions of this item:
- L22 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Organization and Market Structure
- L10 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - General
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