What question did this study set out to answer?

The study aims to analyze the impact of transfer pricing on resource allocation and profitability in decentralized multinational enterprises under differential taxation.

March 18, 2026The Accounting Review

U.S. income tax transfer-pricing rules and resource allocation: The case of decentralized...

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Authors

RHRobert M. HulperinFordham University BSBin SrinidhiCity University of Hong Kong

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Implication

The study examines how transfer pricing influences resource allocation and profits in decentralized multinational enterprises, suggesting implications for tax policy.

Key Points

The study aims to analyze the impact of transfer pricing on resource allocation and profitability in decentralized multinational enterprises under differential taxation.
Developed an analytical model of a decentralized multinational enterprise.
Assessed the implications of transfer pricing methods on resource allocation and profits.
Used numerical examples to illustrate outcomes under different bargaining power scenarios.
Cooperative strategies between divisions can optimize resource allocation in the absence of tax imposition.
With the resale-price method, lower bargaining power ensures profit maximization, but higher power leads to less optimal outcomes.
With the cost-plus method, production dynamics change unpredictably as bargaining power varies, failing to guarantee profits.

Cite This Study

Hulperin et al. (1991) studied this question.

synapsesocial.com/papers/69ba43984e9516ffd37a4f57 https://doi.org/10.2308/tar-9605080009

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Implication

The study examines how transfer pricing influences resource allocation and profits in decentralized multinational enterprises, suggesting implications for tax policy.

U.S. income tax transfer-pricing rules and resource allocation: The case of decentralized...

Discussion

Member takes

Implication

Key Points

Cite This Study

U.S. income tax transfer-pricing rules and resource allocation: The case of decentralized...

Discussion

Member takes

Implication

Key Points

Cite This Study

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