Too Many Products: Decentralized Decision-Making in Multinational Firms
نویسنده
چکیده
Zimmerman (1995) notes that the two most frequently observed transfer pricing methods are market price transfer pricing and full cost transfer pricing. Under the rst of these, the transfer price observed by the local manager is the marginal cost plus a markup over marginal cost which reects the price elasticity of demand of the product in an external market. This markup will be denoted j and substituted into the above expression. In this case, inequality (4) can be written:
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