Transfer pricing rules and competing governments

Raimondos‐Møller, Pascalis & Scharf, Kimberley (2002) Transfer pricing rules and competing governments. Oxford Economic Papers, 54(2), pp. 230-246.

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The literature on the regulation of multinationals' transfer prices has not considered the possibility that governments may use transfer pricing rules strategically when they compete with other governments. The present paper analyses this case and shows that, even in the absence of agency considerations, a non‐cooperative equilibrium is characterised by above‐optimal levels of effective taxation. We then derive conditions under which harmonization of transfer pricing rules lead to a Pareto improvement, and show that harmonization according to the ‘arm's length’ principle—the form of harmonization advocated by the OECD—may not be Pareto improving.

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16 citations in Scopus
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13 citations in Web of Science®

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ID Code: 94042
Item Type: Journal Article
Refereed: Yes
DOI: 10.1093/oep/54.2.230
ISSN: 1464-3812
Divisions: Current > QUT Faculties and Divisions > QUT Business School
Current > Schools > School of Economics & Finance
Copyright Owner: Oxford University Press 2002
Deposited On: 23 Mar 2016 05:53
Last Modified: 24 Mar 2016 04:16

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