Economic Integration and Agglomeration of Multinational Production with Transfer Pricing
Hayato Kato and
Hirofumi Okoshi
Papers from arXiv.org
Abstract:
Do low corporate taxes always favor multinational production over economic integration? We propose a two-country model in which multinationals choose the locations of production plants and foreign distribution affiliates and shift profits between them through transfer prices. With high trade costs, plants are concentrated in the low-tax country; surprisingly, this pattern reverses with low trade costs. Indeed, economic integration has a non-monotonic impact: falling trade costs first decrease and then increase the plant share in the high-tax country, which we empirically confirm. Moreover, allowing for transfer pricing makes tax competition tougher and international coordination on transfer-pricing regulation can be beneficial.
Date: 2022-01, Revised 2022-02
New Economics Papers: this item is included in nep-cwa and nep-int
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)
Downloads: (external link)
http://arxiv.org/pdf/2201.02919 Latest version (application/pdf)
Related works:
Journal Article: ECONOMIC INTEGRATION AND AGGLOMERATION OF MULTINATIONAL PRODUCTION WITH TRANSFER PRICING (2022)
Working Paper: Economic Integration and Agglomeration of Multinational Production with Transfer Pricing (2022)
Working Paper: Economic Integration and Agglomeration of Multinational Production with Transfer Pricing (2021)
Working Paper: Economic Integration and Agglomeration of Multinational Production with Transfer Pricing (2021)
Working Paper: Economic Integration and Agglomeration of Multinational Production with Transfer Pricing (2021)
Working Paper: Economic Integration and Agglomeration of Multinational Production with Transfer Pricing (2019)
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
HTML/Text
Persistent link: https://EconPapers.repec.org/RePEc:arx:papers:2201.02919
Access Statistics for this paper
More papers in Papers from arXiv.org
Bibliographic data for series maintained by arXiv administrators ().