Automobile dealership contracts, the management practice of category management, and transfer pricing practices by multinationals can exhibit a property we refer to as partial delegation. In a bargaining problem between an informed party and an uninformed party, partial delegation involves the...

Tax officials judge whether a multinational's transfer price is consistent with the arm's-length standard, the price at which two independent firms would carry out a similar transaction, by using data from comparable but independent transactions. In vertically integrated industries, the only...

This paper analyzes the effect on firm behavior and national tax revenues of a policy of allowing multinational firms to choose whether to be taxed under separate accounting rules (transfer prices) or an apportionment formula. Either method can be preferred by low-cost firms and by high-cost...

Multinational corporations can shift income into low-tax countries through transfer pricing and debt financing. While most developed countries use thin capitalization rules to limit the extent to which a subsidiary can be financed with internal debt, a number of developing countries do not. In...

We examine the effects of unilateral changes in a country’s tax parameters in a two country model when both countries are part of a destination-based cash flow taxation (DBCFT) system. We consider deviations from a globally efficient DBCFT equilibrium by allowing each country to vary its...

American states and Canadian provinces use formulas to allocate a multi-state company's national profit among the state-level jurisdictions. The formulas typically depend on the company's distribution of revenues and costs. In contrast, most countries allocate a multinational's global profit for...

The view that the transfer pricing problem vanishes under universal destination-based cash flow taxation (DBCFT) is based on how firms behave in perfectly competitive markets. We show that the neutralizing effect DBCFT has on transfer price incentives fails once multinational firms are...

The view that the transfer pricing problem vanishes under universal destinationbased cash flow taxation (DBCFT) is based on how firms behave in perfectly competitive markets. We show that the neutralizing effect DBCFT has on transfer price incentives fails once multinational firms are...