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| Author: | Matsui, K. |
| Title: | Strategic transfer pricing and social welfare under product differentiation |
| Journal: | European Accounting Review
2011 : VOL. 20:3, p. 521-550 |
| Index terms: | models transfer pricing welfare product differentiation oligopoly companies |
| Language: | eng |
| Abstract: | This paper explores the social impacts of strategic transfer pricing (hereafter as: tr-prcs.) by oligopoly firms, aiming at deriving regulatory implications for tr-prcs. Based on the study's model it is found that the negative effects on social welfare of tr-prcs. being set above marginal cost are pronounced when either: 1. the number of competing firms is large with the product being relatively highly differentiated or, 2. the number of firms is small with a not very differentiated product. This result indicates that even when the number of firms in the industry is significant with the market seemingly competitive, the authorities should not overlook the possibility of setting tr-prcs. above marginal cost possibly seriously damaging social welfare in the case of a highly differentiated product. |
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