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We use incentivized economics experiments to test both the point predictions and comparative static predictions of optimal transfer pricing models, comparing behavior under varying conditions, including wholly versus partially-owned subsidiaries and different tariff and tax rates. As predicted, we find that transfer prices are responsive to relative tax and tariff rates as well as ownership proportions. Additionally, we examine convergence and learning in this setting.
From:
Quoc H. Tran
Bridgewater State University
Rachel T.A. Croson
University of Texas, Arlington
Barry J. Seldon
University of Texas, Dallas
We use incentivized economics experiments to test both the point predictions and comparative static predictions of optimal transfer pricing models, comparing behavior under varying conditions, including wholly versus partially-owned subsidiaries and different tariff and tax rates. As predicted, we find that transfer prices are responsive to relative tax and tariff rates as well as ownership proportions. Additionally, we examine convergence and learning in this setting.
From:
Quoc H. Tran
Bridgewater State University
Rachel T.A. Croson
University of Texas, Arlington
Barry J. Seldon
University of Texas, Dallas