Transfer-Pricing by Multinational Manufacturing Firms

This paper deals with the determinants and implications of the pricing of intra-firm trade by manufacturing firms operating in different countries. Intra-firm trade is defined here as transactions involving international shipments of commodities (including capital, intermediate and finished goods, but excluding technology or services) between branches or affiliates under the control of one firm. Only firms in the manufacturing sector (called multinational enterprises, MNEs, for short) are considered: while similar issues of transfer-pricing have arisen in primary sectors, they seem to have been understood more clearly and dealt with in an explicitly bargaining framework.