Transfer Pricing in the Decentralized Multinational Corporation

This paper considers how the multinational corporation's transfer price responds to changes in international corporate effective tax rates. It extends the decentralized decision-making analysis of transfer pricing in the context of different tax rates. It adopts and extends Bond's (1980) model of the decentralized multinational corporation that assumes centralized transfer pricing. The direction of transfer price change is as expected, while the magnitude of change is likely to be less than predicted by the Horst (1971), centralized decision-making model. The paper extends the model further by assuming negotiated transfer pricing, where the analysis is partitioned into perfect and imperfect information cases. The negotiated transfer pricing result reverts to the Horst (1971), or centralized decision-making, result, under perfect information. Under imperfect information, the centralized decision-making result obtains when top management successfully informs division general managers or it successfully implements a non-monetary reward scheme to encourage division general managers to cooperate. Under simplifying assumptions, centralized decision-making dominates decentralized decision-making, while negotiated transfer pricing weakly dominates centralized transfer pricing.

International Transfer Pricing for Goods and Intangible Asset Licenses in a Decentralized Multinational Corporation: Review and Extensions

We review and extend the core literature on international transfer price manipulation to avoid or evade taxes. Under negotiated transfer pricing with a viable bargaining structure, including performance evaluation disconnected from the transfer price, divisions voluntarily exchange accurate information to obtain firm-wide optimality, a result not dependent on restraint from exercising internal market power. For intangible licenses, a larger optimal profit shift for a given tax rate change strengthens incentives for transfer pricing abuse. In practice, an intangible's arm's length range is viewed as a guideline, a context where incentives for abuse materialize. Transfer pricing for intangibles obliges greater tax authority scrutiny.

The Kepler Problem (the road to Bohr)

The classical Kepler problem is reviewed in depth in preparation to studying the Bohr model of the atom.

Pricing and Policy Problems in the Northeast Fluid Milk Industry

This article documents the need for reform of milk pricing in the Northeast. The New York price gouging law can be recast as a fair share law. This new milk policy “kills two birds with one stone.” It corrects regional inequities in raw milk pricing by reforming the pricing of milk at retail by limiting and redistributing excessive retail margins to farmers and consumers. The fair share policy relieves allocative price inefficiency, improves the performance of the federal milk market order pool, and the general performance of the Northeast dairy farming and fluid milk industries.

Asset Pricing with Heterogeneous Agents, Incomplete Markets and Trading Constraints

The consumption capital asset pricing model is the standard economic model used to capture stock market behavior. However, empirical tests have pointed out to its inability to account quantitatively for the high average rate of return and volatility of stocks over time for plausible parameter values. Recent research has suggested that the consumption of stockholders is more strongly correlated with the performance of the stock market than the consumption of non-stockholders. We model two types of agents, non-stockholders with standard preferences and stock holders with preferences that incorporate elements of the prospect theory developed by Kahneman and Tversky (1979). In addition to consumption, stockholders consider fluctuations in their financial wealth explicitly when making decisions. Data from the Panel Study of Income Dynamics are used to calibrate the labor income processes of the two types of agents. Each agent faces idiosyncratic shocks to his labor income as well as aggregate shocks to the per-share dividend but markets are incomplete and agents cannot hedge consumption risks completely. In addition, consumers face both borrowing and short-sale constraints. Our results show that in equilibrium, agents hold different portfolios. Our model is able to generate a time-varying risk premium of about 5.5% while maintaining a low risk free rate, thus suggesting a plausible explanation for the equity premium puzzle reported by Mehra and Prescott (1985).

The Darién Region, Connecting Road of the Americas, among the expressions of hydric wealth, land vocation and the extractive exploration on its violated forms

Colombia has oceanic waters, catchment areas, like lakes, cienagas and swamps, water flows, like rivers, gorges and streams, small rivers and groundwater. The oceanic waters are the Caribbean Sea-1600 km and the Pacific Ocean-1300 km that comprise the north and west continental territory, respectively. Actually the Region of Darién, geographically bounded by the Carribean Sea to the north is becoming to be focused by studies due to use conflicts and disputes about water and a forest reserve on its territories. Considering its location, strategic at northwestern Colombia, frontier region with Central America, several dynamics are imposed. One of them is the implantation of a road system entitled Connecting Road of the Americas. This fact means the construction of an infra-structure that will cross a special zone formed by swamps and jungle known as The Darién Gap. Evidences of such interests are revealed by projects like the constructions of Turbo's Port in the Atlantic Ocean, Department of Antioquia and Tribugá's Port in the Pacific Ocean, Department of Choco, the mountain road and the coastal conection Colombia-Venezuela attending to the main intentions of the central region of the department (Metropolitan Area of Aburrá Valley-AMVA). Human settlements form a productive system, based on small and medium familiar agriculture's production, corresponding to the western portion and piedmont of Abibe's mountain at its antioquian portion, alluvial plan that forms the rivers on this area, the littoral zone that delimits the Carribean Sea, the Darién and Baudó Mountains and the gulf that receives, among other waters, the ones from Atrato and León, as well as the exodus process constitutes a forced exit resulting from actions of several armed groups. It can be identified intense historical, cultural, political and environmental relations, specially the last one associated with strategic ecosystems that are fundamental for the hydric regulation of the region, as well as food safety of the local inhabitants. Results from two researches (UPB, 2007 y 2010) reveals this quick transformation in the spatial re-configuration, demographical and economical indicators and the exacerbated fight for resources, damaging the extractive vocation in the Region. Path to commerce of illegalities (drugs, guns) and to implementation of the agroindustrial project for biofuel production, cooperation program that involves Venezuela, Brazil and Colombia. Appropriation modes allow the existence of strategies since global interests revealing a development logic that privileges the conception of an artificialized nature. Since the smallest portion of rural areas, specific modes of resources exploration are linked to imposed interests of transnational corporations. Disparate consequences are going deeper evidenced by social, technical and nature transformations, envisioning risks for the habitability's condition