| dc.description.abstract | Multinational firms (MNFS) have been a favorite target of political criticism from both the political left and the political right. To be sure, the pervasive economic power of large MNFs has from time to time been abused in both the political and economic arenas (see Kindleberger [19841). When sufficient evidence of abuse has been exposed, national governments and supranational institutions have been quick to act in promulgating regulations and conventions to curb irresponsible corporate practices. One such practice of MNFs that has been noted since the middle 1960/s is manipulative transfer pricing -- the use of intra-firm prices for intermediate products traded between divisions of an MNF to avoid tax payments. Regulating transfer pricing has grown more complex since the problem was first recognized as have the structure of MNFs and the environment in which they operate. Concomitantly, the complexity of economic models of MNF issues has increased. Several economics articles have attempted to model different aspects of intra-firm trade and transfer pricing. They have done so in a variety of ways and have succeeded in describing MNF behavior for a number of rather specific situations. In reviewing the literature on transfer pricing, it became apparent to me that the trend was toward developing a "theory of the multinational firm" but that the body of works lacked generality. I was also disturbed by the lack of discussion of intra-firm trade issues in the agricultural economics literature. This thesis is intended to bring some order to the discussion of these issues and to propose a more general model of the multinational firqm, more along the lines of traditional economic firm theory. The approach is purely economic: the political, financial, and managerial issues surrounding intra-firm trade and transfer pricing are not paid the attention they would deserve in a more comprehensive analysis of MNF behavior. | |
