Transfer Pricing under Capacity Constraints

Arieh Gavious

doi:10.1177/0148558X9901400103

Transfer Pricing under Capacity Constraints

Arieh Gavious

Department of Industrial Engineering and Management

Research output: Contribution to journal › Article › peer-review

2 Scopus citations

Abstract

This study introduces a model of a firm consisting of two interacting divisions with capacity constraints that are private information. The model takes place in a setting in which the capacity of each division is known only to the division manager. Under this setting, top management can monitor only those parameters that are documented and not the actual state of the divisions. The paper shows that under fairly realistic assumptions, a simple transfer-pricing mechanism may achieve the best outcome in the sense of truth revealing and making optimal decisions.

Original language	English
Pages (from-to)	57-72
Number of pages	16
Journal	Journal of Accounting, Auditing and Finance
Volume	14
Issue number	1
DOIs	https://doi.org/10.1177/0148558X9901400103
State	Published - 1 Jan 1999

ASJC Scopus subject areas

Accounting
Finance
Economics, Econometrics and Finance (miscellaneous)

UN SDGs

This output contributes to the following UN Sustainable Development Goals (SDGs)

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10.1177/0148558X9901400103

Cite this

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Transfer Pricing under Capacity Constraints

Abstract

ASJC Scopus subject areas

UN SDGs

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