Transfer pricing under asymmetric information

This paper analyses optimal transfer prices in a firm organized in two divisions. The production costs of the divisions are their respective private information. The objective of headquarters is to determine the transfer pricing method that maximizes total profit less managers' compensation. Managers are interested in their current compensation and in the market evaluation of their experience. In this setting, the paper discusses why particular transfer pricing methods found in practice and literature may induce-inefficiencies, and it identifies conditions under which each method is preferable. Major results are: a market-based transfer price does not implement the first-best solution if there are benefits from internal trade; cost-based transfer,prices may achieve first-best, and they are preferable to negotiated transfer prices if communication is cost-less; dual transfer prices do not implement the first-best solution, as long as collusion cannot be discouraged.

‘There are two truisms in business. Transfer prices are wrong and charges for corporate overhead are too high.‘¹     

基于WebGIS的基准房价信息发布系统设计

基准房价是指以宗地为单位、同种用地类型的房地产单位面积的市场特征价格，构建基准房价的目的在于全面、及时、定量、准确地披露房地产价格体系。基准房价的研究可以为政府制定政策性住房售价、租金标准、征地拆迁补偿标准、房地产税费征收等提供参考依据，同时也可以为普通民众的房地产消费提供价格指导。鉴于基准房价研究的重要意义，在总结国内外基准房价概念、内涵、特点及其信息发布相关理论和技术现状的基础上，设计实现了一个基于WebGIS技术基准房价信息发布系统，经过试运行，用户可以通过该系统快速准确地查询研究区域内的基准房价及其相对应的空间信息。     

Prices and factor demand in an endogenized input–output model

This paper combines factor demand functions (for intermediate input and labour) and price equations (derived from a Generalized Leontief cost function) with the traditional input–output price model. The cost functions determine factor demands for materials and labour as well as output prices at given input prices. At the second level of aggregation, the intermediate demand as a single input is split proportional to the elements in the column of the technical coefficients matrix. The emphasis in this endogenization of technical coefficients is on two features. First, the repercussion of output on input prices, and, second, the link between the econometric model for the supply side and the input–output demand model.     

Keeping Two Sets of Books: The Relationship Between Tax and Incentive Transfer Prices

Multinational enterprises use two types of transfer prices: the tax transfer price to achieve optimal tax outcomes and the incentive transfer price to provide appropriate incentives to offshore managers. The two optimal transfer prices are independent if taxable income is assessed using the formula apportionment approach. Under the separate entity approach, however, they are interdependent: they both decrease as the penalty for noncompliance with the arm's length principle increases; and the tax transfer price decreases and the incentive transfer price increases as the marginal cost of production increases. We also examine the case where the incentive transfer price is negotiated rather than dictated by the parent. The results are robust to different market structures and tax environments.     

基于眼镜板的质量管理控制机制

为了满足眼镜板的质量管理效率,提出了基于眼镜板的质量控制模型。通过质量追溯控制机制,对质量控制模型进行理论及数值分析,得出最优的质量控制机制,包括质量水平、赔偿系数、采购价格等。研究表明,当购买商的最低收益值比较小时,生产商需设计出合理的对购买商的赔偿系数和销售价格,反之,则需要设计利润转移机制,来平衡质量控制机制,使眼镜板生产商的利润最大化。     

Multiproduct price competition with heterogeneous consumers and nonconvex costs

This paper extends the oligopolistic model of price competition to environments with multiple goods, heterogeneous consumers, and arbitrary continuous cost functions. A Nash equilibrium in mixed strategies with an endogenous sharing rule is proven to exist. It is also shown that, in environments with fixed costs and constant marginal costs, all (symmetric and asymmetric) equilibria exhibit price dispersion across stores. Furthermore, the paper identifies scenarios in which prices will necessarily be random. In these markets, stores keep each other guessing because, given the fixed costs, they would incur a loss if their price strategies were anticipated and beaten by competitors. This is interpreted as an important economic feature that is possibly behind random price promotions such as weekly specials.     

价格对时间敏感时的供应链响应时间决策研究

以一个两阶段的供应链系统为背景,研究了价格对时间敏感时的MTO供应链的响应时间决策问题。分别分析了两种补偿成本结构下的供应链收益函数,进行了优化求解。决策模型在一个汽车行业定制供应链得到了实际应用。该研究为供应链企业基于时间竞争提供了有效的决策工具。     

Wages and prices: Are workers fully compensated for cost of living differences?

This paper investigates the equilibrium relationship between wages and prices across labor markets. Of central interest is the extent to which workers receive higher wages to compensate for differences in the cost of living. According to the spatial equilibrium hypothesis, the utility of homogenous workers should be equal across labor markets. This implies that controlling for amenity differences across areas, the elasticity between wages and the general price level across areas should equal one, at least under certain conditions. I test this hypothesis and find that the predicted relationship holds when housing prices are measured by rents and the general price level is instrumented to account for measurement error. When housing prices are measured by housing values, however, the wage-price elasticity is significantly less than one, even using instrumental variables. Rents reflect the price paid for housing per unit of time and are arguably the superior measure. Thus, findings in this essay provide support for the full compensation hypothesis. These findings also have important implications for researchers estimating the implicit prices of amenities or ranking the quality of life across areas.     

Quality competition with motivated providers and sluggish demand

We study incentives for quality provision in markets where providers are motivated (semi-altruistic); prices are regulated and firms are funded by a combination of block grants and unit prices; competition is based on quality, and demand adjusts sluggishly. Health or education are sectors in which the mentioned features are the rule. We show that the presence of motivated providers makes dynamic competition tougher, resulting in higher steady-state levels of quality in the closed-loop solution than in the benchmark open-loop solution, if the price is sufficiently high. However, this result is reversed if the price is sufficiently low (and below unit costs). Sufficiently low prices also imply that a reduction in demand sluggishness will lead to lower steady-state quality. Prices below unit costs will nevertheless be welfare optimal if the providers are sufficiently motivated.     

The Effect of CEO Stock-Based Compensation on the Pricing of Future Earnings

This paper examines whether CEO stock-based compensation has an effect on the market’s ability to predict future earnings. When stock-based compensation motivates managers to share their private information with shareholders, it will expedite the pricing of future earnings in current stock prices. In contrast, when equity-compensated managers attempt to temporarily manipulate the stock price to maximize their own benefit rather than that of shareholders, the market may not fully anticipate future performance. We find that a CEO’s stock-based compensation strengthens the association between current returns and future earnings, indicating that more information about future earnings is reflected in current stock prices. In addition, we find that the positive effect is weaker for firms that have a high level of signed discretionary accruals or a low management forecast frequency. Overall, our study suggests that on average, equity-based compensation improves the informativeness of stock prices about future earnings, while opportunistic discretionary accruals or lowered earnings guidance hamper this improvement.     

供应链中基于质量控制的契约模型分析

供应链中的业务外包策略充分发挥了供应链节点企业的核心竞争力，但同时存在产品质量难以控制的问题。本文通过构建以价格折扣和质保金为参数的契约模型，分析了制造商在非对称信息条件下对业务外包产品进行质量控制的最优契约设计问题。     

Quantiles as optimal point forecasts

Loss functions play a central role in the theory and practice of forecasting. If the loss function is quadratic, the mean of the predictive distribution is the unique optimal point predictor. If the loss is symmetric piecewise linear, any median is an optimal point forecast. Quantiles arise as optimal point forecasts under a general class of economically relevant loss functions, which nests the asymmetric piecewise linear loss, and which we refer to as generalized piecewise linear (GPL). The level of the quantile depends on a generic asymmetry parameter which reflects the possibly distinct costs of underprediction and overprediction. Conversely, a loss function for which quantiles are optimal point forecasts is necessarily GPL. We review characterizations of this type in the work of Thomson, Saerens and Komunjer, and relate to proper scoring rules, incentive-compatible compensation schemes and quantile regression. In the empirical part of the paper, the relevance of decision theoretic guidance in the transition from a predictive distribution to a point forecast is illustrated using the Bank of England’s density forecasts of United Kingdom inflation rates, and probabilistic predictions of wind energy resources in the Pacific Northwest.     

A scenario-based integrated approach for modeling carbon price risk

Carbon prices are highly dependent on government emission policies and local industrial compositions. When historical data does not exist or limited price data can only be sourced from another country, scenario analysis becomes the only tool for the modelling of future carbon prices. However, various plausible but equally possible scenarios can produce large variations in forecast carbon prices. In a traditional approach of scenario analysis, investment decisions or risk management strategies are proposed and analysed for each given scenario, optimal solutions are determined. However, when the number of scenarios becomes large, it often becomes too complex and intractable to have a clear view on the selection of investment decisions or risk-management strategies because these decisions and strategies are closely linked with each of the many scenarios. In this paper, it is proposed to use a stochastic mean-reversion model to represent future carbon price movements, but this model is calibrated to the forecast carbon prices of all the scenarios. In this approach, a single model is used to capture the underlying uncertainty and expectation of the stochastic carbon prices as projected by all the scenarios, carbon price risk can thus be modeled and analysed without the need for direct references to any specific scenarios. The modelling and management of long-term carbon-price risk are therefore purely dependent on future carbon price levels and volatilities of these scenarios, instead of on the scenarios themselves. Through such an approach, the optimization of investment decisions and risk management solutions can be much simpler because the forecasted carbon prices are the only input data.      

Monetary policy and asset prices in an open economy

This paper examines whether central banks should respond to asset price fluctuations in a two-country sticky price model. We compare a monetary policy rule that targets both domestic asset prices and foreign asset prices with several alternative monetary policy rules. This paper shows that this policy rule can produce preferable outcomes because the domestic central bank incorporates important information that both domestic and foreign asset prices possess into its monetary policy. Our model suggests that central banks should consider both domestic and foreign asset prices in a two country framework with asset price fluctuations.     

International pharmaceutical supply prices: Definitions — problems — policy implications

In cases where the buyer and the seller of goods and services are companies belonging to the same group the prices charged for goods and services are called ‘international delivery prices’ or ‘international transfer prices’. The peculiarities of research-based companies are such that attempts to ascertain in practice what constitutes an ‘appropriate’ international delivery price are beset by a number of problems. Any scheme that is devised to solve the problems of international transfer prices should feature general ‘rules’ on how the various countries ought to share in central costs. As international transfer prices are a prerequisite for an efficient world economy based on the division of labour an agreement should be reached on the design and content of suitable delivery price systems for a research-intensive industry.     

Effects of the 1979 gasoline shortages on Philadelphia housing prices

Conventional theory predicts that transportation cost to a big-city central business district is an important determinant of housing prices. If this is true, the sudden rise in gasoline price following the Iranian revolution in 1979 could have caused a relative housing-price shift in central and peripheral neighborhoods. This paper looks for such an effect by fitting hedonic price functions in selected neighborhoods at varying distances from downtown Philadelphia, and testing for a relative shift at the time of the gasoline shortage. The results suggest that the energy shortage's effects may have been focused disproportionately on a few already revitalizing neighborhoods.     

Pricing Internal Trade to Get a Leg up on External Rivals

The pricing of transfers from parent to subsidiary is an oft-explored issue. Linking the cost of internal transfers with external market prices is one common approach, typically justified when the market for the good is perfectly competitive. This paper shows that imperfect competition may also justify market-based transfer prices. Concern that transfer price will deviate from marginal cost and thereby distort subsidiary choices can lead a parent to undertake actions to influence the market price of the upstream good. Such efforts can provide a desirable strategic posture in the upstream market.     

Upstream conduct and price authority with competing organizations

We characterize the degree of price authority that competing upstream principals award their downstream agents in a setting where these agents own private information about demand and incur nonverifiable distribution costs. Principals cannot internalize these costs through monetary incentives and design “permission sets” from which agents choose prices. The objective is to understand the forces shaping delegation and the constraints imposed on equilibrium prices. When principals behave noncooperatively, agents are biased toward excessively high prices because they pass on distribution costs to consumers. Hence, the permission set only features a price cap that is more likely to bind as products become closer substitutes, in sectors where distribution is sufficiently costly, and when demand is not too volatile. By contrast, when principals behave cooperatively, the optimal delegation scheme is richer and more complex. Because principals want to charge the monopoly price, the optimal permission set features a price floor when the distribution cost is sufficiently low, it features instead full discretion for moderate values of this cost, and only when it is high enough, a price cap is optimal. Surprisingly, while competition (as captured by stronger product substitutability) hinders delegation in the noncooperative regime, the opposite occurs when principals maximize industry profit.     

会计中的价值与成本问题

文章探讨"价值"与"成本"在财务会计和成本(管理)会计中的性质与功能。在财务会计中,价值通常来自市场,表现为过去的买入市价、当前的买入或脱手(销售)市价,这些价格可以称为历史成本、现行成本和公允价值,并作为财务会计与报表(报告)的计量属性。但成本会计中的成本则意味着产品成本,是由资产和其他资源的价值转化而来,在产品生产过程中,主要的信息是产品成本的分配、归集和积累,这里没有新价值可以确认,除非产品在市场交换。总之,在财务会计中,价值和成本信息表示一个企业的经营、投资和融资能力,而在成本会计中,只有成本信息表现管理层的才能(比如企业有效利用企业资源效率常表现为成本水平的高低)。     

Transfer Prices: A Financial Perspective

The arguments for and against transfer pricing schemes so far have focused on profit‐seeking approaches based on tax differentials, or on evasion of government enforced goods and fund flow restrictions. This article shifts to a value‐seeking framework where transfer prices act as strategic tools that may enhance value for the multinational with a foreign affiliate by exploiting financial and/or tax arbitrage that also lead to ownership arbitrage. The results show that there is an optimal level of transfer price depending on the specific exchange rate distribution when the cost structure allows for a penalty for overcharging. Moreover, this article introduces a new form of tax arbitrage benefit of transfer prices that is based on present value of tax shields.