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Transfer pricing by the Canadian oil industry: a company analysis

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  • Jean-Thomas Bernard
  • Eric Genest-Laplante

Abstract

The Canadian oil industry has been the subject of several debates with respect to charges of transfer pricing. On the basis of a large data set, which includes all oil shipments into the US and Canada from 1974-84, the first direct test of manipulative transfer pricing, based on actual company behaviour, is performed. Particular attention is paid to the multicollinearity problem which arises in this context. Through regression analysis it emerges that the six largest Canadian affiliates of multinational corporations paid crude-oil import prices which were generally equal to or lower than prices of third-party transactions for a country in a given year. This is a fairly robust result which highlights the existence of manipulative transfer pricing. In the present case, the practice was beneficial to Canada.

Suggested Citation

  • Jean-Thomas Bernard & Eric Genest-Laplante, 1996. "Transfer pricing by the Canadian oil industry: a company analysis," Applied Economics Letters, Taylor & Francis Journals, vol. 3(5), pages 333-340.
    • Handle: RePEc:taf:apeclt:v:3:y:1996:i:5:p:333-340
    DOI: 10.1080/135048596356465
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    References listed on IDEAS

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    1. Jean-Thomas Bernard & Robert J. Weiner, 1992. "Transfer Prices and the Excess Cost of Canadian Oil Imports: New Evidence on Bertrand versus Rugman," Canadian Journal of Economics, Canadian Economics Association, vol. 25(1), pages 22-40, February.
    2. repec:aen:journl:1992v13-01-a09 is not listed on IDEAS
    3. Weiner, R.J., 1991. "Is the World Oil Market "One Great Pool?"," Papers 9120, Laval - Recherche en Energie.
    4. repec:aen:journl:1991v12-03-a07 is not listed on IDEAS
    5. N. E. Savin, 1980. "The Bonferroni and the Scheffé Multiple Comparison Procedures," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 47(1), pages 255-273.
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    Cited by:

    1. Borkowski, Susan C., 1997. "Factors affecting transfer pricing and income shifting (?) between Canadian and U.S. transnational corporations," The International Journal of Accounting, Elsevier, vol. 32(4), pages 391-415.

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