Three Essays on Transfer Pricing

This dissertation consists of three essays dealing with the roles of taxation and trade policies on a decentralized Multinational Enterprise's (or MNE's) behaviors under transfer pricing rules. The first essay studies the effects of transfer pricing rules on the decentralized MNE's use of transfer pricing as a strategic device for competition assuming that the choices of vertical foreclosure and vertical supply are exogenously determined. In vertical foreclosure scenario, it is more likely for the MNE to charge the prohibitive transfer price when there are transfer pricing rules than when there are not. In vertical supply scenario, the value of optimal transfer price depends on the values of exogenous variables. The MNE's share of the ownership in subsidiary firm has a significant effect on the optimal transfer pricing. The second essay studies the effects of transfer pricing rules on the decentralized MNE's decision on vertical supply versus vertical foreclosure. Under transfer pricing rules, if countries' markup percentages are higher than the true profit rates earned by the MNE, then the minimum values of final product import tariff and input supply elasticity, which induce vertical supply, are lower when there are transfer pricing rules than when there are not. The last essay looks at the recent empirical evidences of taxable income differentials between foreign- and domestically controlled companies in Thailand. Some evidences indicate that the foreign-controlled companies report higher taxable incomes than do the domestically controlled companies. The essay also discusses about general business environment in Thailand.

Name thesis:degree_name

Ph.D.

Level thesis:degree_level

Dissertation

Discipline thesis:degree_discipline

Economics

Grantor

University of Illinois at Urbana-Champaign

Year dc:date

2015

Author dc:creator

• Borvornboonrutai, Kitikhun

Contributors dc:contributor

• Gahvari, Firouz

• Economics, Commerce-Business

Language dc:language

eng

Identifier

(MiAaPQ)AAI3044055

OAI identifier oai:identifier

oai:www.ideals.illinois.edu:2142/85517