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ディスカッション／ワーキング・ペーパー

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Discussion Papers In Economics And Business. 2021, 20-19, p. 1-63

Economic Integration and Agglomeration of Multinational Production with Transfer Pricing

Graduate School of Economics, Osaka University

英語

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2021-01

http://www2.econ.osaka-u.ac.jp/econ_society/dp/2019.pdf

Do low corporate taxes always favor multinational production in the course of 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 home plants and foreign affiliates by manipulating transfer prices in intra-firm trade. We show that when trade costs are high, plants are concentrated in the low-tax country, but surprisingly this location pattern reverses when they are low. Unlike existing models with single-plant firms, the impact of economic integration is non-monotonic, which we empirically confirm: a fall in trade costs first decreases and then increases the share of plants in the high-tax country.We also analyze tax competition and find that allowing for transfer pricing makes competition tougher, indicating a possibility of international coordination on transfer-pricing regulation making the world better off.

78355

Economic Integration and Agglomeration of Multinational Production with Transfer Pricing

Graduate School of Economics, Osaka University

英語

2021-01

Discussion Papers In Economics And Business

20-19

1

63

https://hdl.handle.net/11094/78355

http://www2.econ.osaka-u.ac.jp/econ_society/dp/2019.pdf