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Joint Ventures and Transfer Pricing Rivalry


  • Gabrielsen, T.S.
  • Schjelderup, G.


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.

Suggested Citation

  • Gabrielsen, T.S. & Schjelderup, G., 1998. "Joint Ventures and Transfer Pricing Rivalry," Norway; Department of Economics, University of Bergen 0898, Department of Economics, University of Bergen.
  • Handle: RePEc:fth:bereco:0898

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    References listed on IDEAS

    1. Cox, John C. & Ross, Stephen A., 1976. "The valuation of options for alternative stochastic processes," Journal of Financial Economics, Elsevier, vol. 3(1-2), pages 145-166.
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    JEL classification:

    • 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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