The paper examines how country tax differences affect a multinational enterprise's choice to centralize or de-centralize its decision structure. Within a simple model that emphasizes the multiple conflicting roles of transfer prices in MNEs – here, as a strategic pre-commitment device and a tax manipulation instrument –, we show that (de-)centralized decisions are more profitable when tax differentials are (small) large.
|Place of Publication||Frederiksberg|
|Publisher||Copenhagen Business School, CBS|
|Number of pages||17|
|Publication status||Published - 2005|
|Series||Working Paper / Department of Economics. Copenhagen Business School|
- Centralized vs. de-centralized decisions