Joint Ventures and Transfer Pricing Rivalry
The 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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|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/
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