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.     

Internal Migration of Blacks in South Africa: An Application of the Roy Model

This study investigates the internal migration of black males in South Africa over the period after the formal end of Apartheid using the 1996 census data. The two issues of our primary interests are the following: (i) whether migration patterns of black individuals are consistent with the income‐maximising hypothesis as related to the destination choice; and (ii) whether the redistribution of human capital is detected in internal migration. The results from conditional logit regressions on choices among individuals in 318 districts show that individuals prefer districts with higher expected wages, conditional on other regional characteristics. In addition, there exist differing preferences on the share of population with post‐secondary education by individuals with commensurate educational attainments. Black individuals with post‐secondary education tend to migrate into areas with a higher share of population with post‐secondary education and vice versa, which confirms the divergence of human capital levels across districts.     

Sources of family income and expenditure on children's private,after‐school education in Korea

This paper examines the relationship between sources of family income and household expenditure on private, after‐school education for children in secondary schools in Korea in the context of educational ‘credentialism’, which values evidence of college education highly. Data from a survey of 514 parents of secondary school students are used. Estimated ordinary least squares coefficients indicate that the wife's income, but not the husband's, was positively associated with the amount of spending on children's education at private, after‐school programmes. This finding suggests that some married women with children in Korea seek employment in order to earn the money needed for their children's private, after‐school education.     

The economics of household waste management: a review

In recent years reducing the amount of waste generated by households has become an important policy issue in industrialised economies. It is no longer acceptable to discard waste without concern for environmental and natural resource issues. In an effort to reduce household waste various policy instruments such as kerbside charges, deposit-refund schemes, integrated sales tax exemptions and virgin material taxes, have been proposed and/or implemented. This article reviews the economics literature that has addressed household waste management. It is argued that a comprehensive modelling framework is necessary if the complex policy environment is to be accurately described.     

Retail and Wholesale Margins in Successive Cournot Oligopolies

This paper studies the determination of retail and wholesale prices in successive Cournot oligopolies. It is shown that (i) the ratio of retail to wholesale margins increases (decreases, resp.) as the retail part of the market becomes less (more, resp.) competitive; (ii) the ratio of margin in one part of the market to total margin increases (decreases, resp.) as that part of the market becomes less (more, resp.) competitive; (iii) the decline in final consumer price is larger (smaller, resp.) if the entry of additional firm occurs in less (more, resp.) competitive part of the market. The results of the paper are applied to the case of third degree price discrimination.     

The Role of Central Government in Tax Competition Between Heterogenous Regions

This paper analyzes the role of central government in a Nash tax competition between two heterogenous regions, which differ in their endowments of two production factors. Regional governments use a source-based unit tax on mobile capital to finance their public service expenditures. The central government employs excise subsidies and lump-sum taxes to induce the two regions to efficient resource allocations. We answer to the question that whether the central government can induce an efficient equilibrium, and investigate the effects of endowments difference on the optimum subsidy rates. We find that there exists a unique tax rate under which the efficiency is achieved. We identify the set of endowment allocations for which the subsidy rate to one region is higher (or lower) than the subsidy rate to the rival. The large poor region receives a higher subsidy than the small rich region, but the subsidy to the small poor region may be higher or lower than that to the large rich region. [H2]     

Technical trading rules for nonlinear dynamics of stock returns: evidence from the G-7 stock markets

This paper explores a possible link between an asymmetric dynamic process of stock returns and profitable technical trading rules. Using the G-7 stock market indexes, we show that the dynamic process of daily index returns is better characterized by nonlinearity arising from an asymmetric reverting property. The asymmetric reverting property of stock returns is exploitable in generating profitable buy and sells signals for technical trading strategies. The bootstrap analysis shows that not all nonlinearities generate profitable buy and sell signals, but rather only the nonlinearities generating a consistent asymmetrical pattern of return dynamics can be exploitable for the profitability of the trading rules. The significant positive (negative) returns from buy (sell) signals are a consequence of trading rules that exploit the asymmetric nonlinear dynamics of the stock returns that revolve around positive (negative) unconditional mean returns under prior positive (negative) return patterns. Our results corroborate the arguments for the usefulness of technical trading strategies in stock market investments.