Cost-based transfer pricing

This paper compares the performance of alternative cost-based transfer pricing methods. We adopt an incomplete contracting framework with asymmetric information at the trading stage. Transfer pricing guides intra-company trade and provides incentives for value-enhancing specific investments. We compare actual-cost transfer prices that include a markup over marginal costs with standard-cost transfer prices that are determined either by the central office ex ante (centralized standard-cost transfer pricing) or by the supplying division at the trading stage (reported standard-cost transfer pricing). For the actual-cost methods, we show that markups based on the joint contribution margin (contribution-margin transfer pricing) dominate purely additive markups (cost-plus transfer pricing). We obtain the following results. (1) Centralized standard-cost transfer pricing dominates the other methods if the central office and the divisions ex ante face low cost uncertainty. (2) The actual-cost methods dominate the other methods if the central office and the divisions ex ante face high cost uncertainty and later, at the trading stage, the buying division receives sufficient cost information. (3) Reported standard-cost transfer pricing dominates the other methods if the central office and the divisions ex ante face high cost uncertainty, and the buyer has insufficient cost information at the trading stage.     

Co‐owned Local Government Organisations: Conditions for Strategy Development

Local governments tend to join resources and create co‐owned organisations to solve the supply of public services. From a strategic perspective on local government cooperation, this paper analyses the conditions for strategy development in a co‐owned municipal organisation. The empirical data stem from a longitudinal case study of a Swedish provider of water and sewerage services. We show that difficulties in formulating and agreeing upon strategies are not dependent on the structural form. Instead, there is an intrinsic dilemma when municipalities are to create a joint strategy at the same time as each municipality is sovereign to decide on all local matters.     

Solvency II – towards a new insurance supervisory system in the EU

This article describes the current state of affairs in the EU Solvency II project. The background and international context of the project is discussed, as well as the general outline of a future EU solvency system. In particular, several areas where further technical work is needed are outlined. These topics could provide interesting objects of study for professionals of actuarial sciences as well as to those of other related sciences.     

Services and consumer protection the proposed Swedish consumer services act

The Nordic countries are at present preparing a regulation of consumer services contracts. Proposals for comprehensive Consumer Services Acts have been submitted by Governmental Committees in Sweden and Norway. The author, himself Chairman of the Swedish committee, reports about the Swedish proposals which soon may become applicable law. They will cover most service contracts with the exception of insurance and professional services. The Act will be of a private law character and regulate the performance of and liability for the contract in a mandatory way. The consumer's position in service contracts will be improved in many respects, and these are outlined in some detail in the paper.

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Eine schwedische Gesetzesvorlage zur Verbesserung des Verbraucherschutzes bei Dienstleistungen

Zusammenfassung Die intensive verbraucherpolitische Gesetzgebung der Nordischen Staaten — Schweden, Dänemark, Norwegen, Finnland — war bislang auf Handelspraktiken, Verbraucherkredit, Haftungsfragen und Kaufrecht konzentriert. Dienstverträge waren bislang nur sehr lückenhaft geregelt, obwohl erhebliche Werte umgeschlagen werden.Inzwischen hat eine schwedische Regierungskommission, die vom Autor dieses Beitrages geleiter wurde, ebenso wie eine norwegische Kommission einen umfassenden Gesetzgebungsvorschlag für Konsumentendienstverträge vorgelegt. Die Kommission beschreitet dabei bewußt rechtspolitisches Neuland.Der Beitrag geht auf die wichtigsten Vorschläge der Kommission ein, die weitgehend schon öffentliche Zustimmung gefunden haben und vermutlich zu einer entsprechenden legislativen Initiative führen. Das Gesetz wird nicht alle Dienstleistungen erfassen, etwa nicht Versicherungen, die einer besonderen gesetzlichen Regelung unterliegen, und Arztverträge. Zentraler Regelungsgegenstand sind Werkverträge (Reparaturverträge) an beweglichen Sachen und Gebäuden.Folgende Einzelvorschläge der Kommission verdienen besondere Beachtung: Werbeaussagen des Unternehmers, etwa über die Qualität seiner Dienstleistungen, werden grundsätzlich Vertragsinhalt und lösen bei Täuschung entsprechende Vertragssanktionen aus. Der Verbraucher kann den Vertrag jederzeit widerrufen, wenn das Werk noch nicht fertiggestellt ist, muß aber die geleisteten Dienste vergüten. Ausführlich und zwingend werden die Verzugsfolgen und die Gewährleistungshaftung des Unternehmers geregelt. Die Gewährleistungshaftung setzt eine entsprechende Anzeige des Konsumenten voraus, die spätestens zwei Jahre nach Gefahrübergang, bei unerkennbaren Mängeln auch länger, erfolgen muß. Bei Mängeln hat der Konsument ein kostenloses Nachbesserungsrecht. Unter bestimmten Umständen — nämlich Vertragsbruch durch Verzug oder gravierende Mängel — hat der Kunde ein Kündigungsrecht. Bei weniger gravierenden Mängeln kann der Konsument Minderung verlangen, sofern der Unternehmer nicht den Mangel beseitigt.Das Recht des Konsumenten auf Schadenersatz wird erweitert und in seiner Durchsetzungsmöglichkeit durch Beweislastregeln erleichtert. Es tritt grundsätzlich neben die sonstigen Rechtsbehelfe auf Nachbesserung, Kündigung und Minderung. Die Vorschläge regeln auch die Schadensberechnung, wobei im Verzugsfall vernünftige Pauschalen vereinbart werden können. Die Regelungen sollen zugunsten des Kunden zwingend sein.Schließlich enthält der Entwurf noch Vorschläge über Rechtsfolgen bei Verzug des Konsumenten mit seiner Leistung. Hier wird ein gerechter Interessenausgleich zwischem dem Zahlungs- und dem Ersatzanspruch des Unternehmers einerseits und dem Schutzanliegen des Konsumenten, insbesondere gegenüber übermäßig belastenden Verzugsfolgen, andererseits versucht.

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Ulf Bernitz is Professor of Private Law, Institute for Intellectual Property and Market Law, University of Stockholm, Fack, S-106 91 Stockholm 50, Sweden. From July 1980 he holds a chair of Consumer and Market Law at the same University. Parts of this paper appear also in the English language summary of the Swedish Government Official Report listed under References.     

Regressor and random-effects dependencies in multilevel models

The objectives of this paper are (1) to review methods that can be used to test for different types of random effects and regressor dependencies, (2) to present results from Monte Carlo studies designed to investigate the performance of these methods, and (3) to discuss estimation methods that can be used when some but not all of the random effects and regressor independence assumptions, are violated. Because current methods are limited in various ways, we will also present a list of open problems and suggest solutions for some of them. As we will show, the issue of regressor random-effects independence has received some attention in the econometrics literature, but this important work has had little impact on current research practices in the social and behavioral sciences.     

Youth unemployment

Youth unemployment has been on the rise since the beginning of the crisis in 2008. Even more troublesome is the dramatic rise in the number of youth not in employment, education or training, which has led to widespread concerns about the impact on social cohesion and fears of a “lost generation”. Given the extreme differences in youth unemployment levels among member states, it is clear that no single labour market policy will be appropriate throughout the EU. There may, however, be opportunities for mutual learning on how to combat youth unemployment. This Forum explores youth unemployment in the EU via case studies of England, Belgium, Spain, Poland and Ireland. It also examines Germany’s dual vocational training system as one potential solution.     

Rekommunalisierung: Renaissance öffentlicher Unternehmen?

The decision to provide services of general interest by public or private enterprises has to be based on the following key issue: should one refer to these services as public goods? This question cannot be answered generally but has to be addressed on a case-tocase basis. Although there are some tendencies for remunicipalisation, especially in the energy sector, empirical studies show a lack of evidence about actual remunicipalisation of public service provisions and its impacts. To explain why local governments in Germany are presently thinking about remunicipalising some services there are changing factors to be identified. However, a closer look at the changing determinants makes clear that there are other options apart from remunicipalisation. Local politicians may have many reasons for providing services by public entities. The most relevant reason is nevertheless the option to organise and govern these services which are relevant for the local community.     

The process of internationalization: how Swedish food retailers perceive their domestic supplier relationships

This paper focuses on how retailer–manufacturer relationships are influenced by the process of internationalization. Empirically, we study the Swedish food sector. It has previously been domestically oriented and concentrated. As Sweden joined the EU in 1995, however, a lot of entry barriers have disappeared and Swedish food retailers have been given new purchasing opportunities. We investigate how these changes have affected the retailers' relationships with their suppliers.Theoretically the paper is based on a network perspective and resource dependence theory.It develops and tests a set of hypotheses on howa retailer's relationships to its domestic suppliers will change when it gets a greater access to foreign products and suppliers, using a survey of 621 Swedish food retailers. Among other things, the study reveals that while being prepared to buy fewer products from Swedish manufacturers, the retailers still consider it very important to co-operate on a long-term basis with domestic suppliers.