Profit-shifting in Two-sided Markets
We investigate how multinational two-sided platform firms set their prices on intra firm transactions. Two-sided platform firms derive income from two customer groups that are connected through at least one positive network externality from one group to the other. A main finding is that even in the absence of taxation transfer prices deviate from marginal cost of production. A second result of the paper is that it is inherently difficult to establish arm's length prices in two-sided markets. Finally, we find that differences in national tax rates may be welfare enhancing despite the use of such prices as a profit shifting device.
|Date of creation:||14 Apr 2009|
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"Efficiency Enhancing Taxation in Two-sided Markets,"
2008/1, Department of Business and Management Science, Norwegian School of Economics.
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- repec:ntj:journl:v:52:y:1999:i:n._2:p:305-22 is not listed on IDEAS
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