Advanced Search
MyIDEAS: Login to save this paper or follow this series

Transfer Pricing Based on Actual versus Standard Costs

Contents:

Author Info

  • Lengsfeld, Stephan
  • Schiller, Ulf
Registered author(s):

    Abstract

    The use of information plays an important role in the choice of transfer prices (TP). We discuss the information provision of two centralized mechanisms, namely, actual-cost and standard-cost based TP. Actual cost based TP use all available cost information whereas standard cost based TP only reflect expected cost. We analyze the impact of either regime on the incentives of two divisions that make upfront investments and - later - trade an intermediate good. Actual cost based TP allow for a flexible adjustment of the trade decision to the realization of marginal costs but lead to under-investment and under-trade. Standard cost based TP provide excellent investment incentives but loose flexibility. Which of both TP regimes is superior thus depends on the amount of uncertainty, the returns on investments and the average profitability of trade --

    Download Info

    If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
    File URL: http://econstor.eu/bitstream/10419/22079/1/272.pdf
    Download Restriction: no

    Bibliographic Info

    Paper provided by University of Tübingen, School of Business and Economics in its series Tübinger Diskussionsbeiträge with number 272.

    as in new window
    Length:
    Date of creation: 2003
    Date of revision:
    Handle: RePEc:zbw:tuedps:272

    Contact details of provider:
    Postal: Keplerstr. 17, 72074 Tübingen
    Phone: 07071/29-72563
    Fax: 07071/29-5179
    Email:
    Web page: http://www.uni-tuebingen.de/en/faculties/wirtschafts-und-sozialwissenschaftliche-fakultaet/faecher/wirtschaftswissenschaft.html
    More information through EDIRC

    Related research

    Keywords: Transfer Pricing; Hold Up Problem; Intrafirm Trade; Incomplete Contracts;

    Find related papers by JEL classification:

    References

    No references listed on IDEAS
    You can help add them by filling out this form.

    Citations

    Lists

    This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

    Statistics

    Access and download statistics

    Corrections

    When requesting a correction, please mention this item's handle: RePEc:zbw:tuedps:272. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (ZBW - German National Library of Economics).

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If references are entirely missing, you can add them using this form.

    If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.