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Strategic Incentives for Keeping One Set of Books under the Arm's Length Principle

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dc.affiliation.dptoUC3M. Departamento de EconomĂ­aes
dc.contributor.authorLemus Torres, Ana Belén
dc.contributor.authorMoreno, Diego
dc.contributor.editorUniversidad Carlos III de Madrid. Departamento de EconomĂ­aes
dc.contributor.funderMinisterio de Economía y Competitividad (España)es
dc.date.accessioned2019-08-01T09:43:08Z
dc.date.available2019-08-01T09:43:08Z
dc.date.issued2019-08-01
dc.description.abstractThe OECD's recommendation that transfer prices between multinational enterprises and their subsidiaries be consistent with the Arm's Length Principle (ALP) for tax purposes does not restrict internal pricing policies. However, we show that under imperfect competition firms may choose to keep one set of books (i.e., to set transfer prices consistent with the ALP), as a way of softening competition in the external market. As a result, firms' profits are greater, and the surplus is smaller, than under vertical integration. In contrast, when firms keep two sets of books (i.e., their transfer prices differ from those used for tax purposes), competition intensifies in both markets relative to vertical integration.en
dc.description.sponsorshipMoreno Acknowledges financial support of the Ministerio EconomĂ­a (Spain), grant PGC2018-098510-B-I00.en
dc.identifier.issn2340-5031es
dc.identifier.urihttps://hdl.handle.net/10016/28676
dc.identifier.uxxiDT/0000001720es
dc.language.isoenges
dc.relation.ispartofseriesUC3M Working papers. Economicsen
dc.relation.ispartofseries19-14es
dc.relation.projectIDGobierno de España. PGC2018-098510-B-I00es
dc.rightsAtribución-NoComercial-SinDerivadas 3.0 España*
dc.rights.accessRightsopen accessen
dc.rights.urihttp://creativecommons.org/licenses/by-nc-nd/3.0/es/*
dc.subject.jelL1es
dc.subject.jelL5es
dc.subject.jelH2es
dc.subject.otherTransfer Pricing Regulationen
dc.subject.otherImperfect Competitionen
dc.subject.otherVertical Separationen
dc.subject.otherArm's Length Principleen
dc.titleStrategic Incentives for Keeping One Set of Books under the Arm's Length Principleen
dc.typeworking paper*
dc.type.hasVersionAO*
dspace.entity.typePublication
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