Transfer Pricing: Roles and Regimes

Søren Bo Nielsen

Research output: Contribution to journalJournal articleResearchpeer-review


Against a background of rather mixed evidence about transfer pricing practices in multinational enterprises (MNEs) and varying attitudes on the part of tax authorities, this paper explores how multiple aims in transfer pricing can be pursued across four different transfer pricing regimes. A MNE has a production subsidiary in one country, from where it sells the produced good locally as well as to a sales subsidiary in a second country. The latter subsidiary is engaged in duopolistic competition with a local competitor. The MNE has two aims in setting
the transfer price: strategic delegation and tax minimization. We examine the extent to which the four transfer pricing regimes we set up allow the MNE to pursue these aims. While neither strategic delegation nor tax minimization will be eliminated, trade-offs are inevitable, albeit to varying degree.
Original languageEnglish
JournalRevista de Economia Mundial
Pages (from-to)103-122
Publication statusPublished - 2014

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