The Impact of Transfer Pricing on Intrafirm Trade

40 Pages Posted: 8 Aug 2012

See all articles by Kimberly A. Clausing

Kimberly A. Clausing

Reed College - Department of Economics

Date Written: August 1998

Abstract

Using data on the operations of U.S. parent firms and their foreign affiliates between 1982 and 1994, this paper examines the extent to which tax minimizing behavior influences intrafirm trade. The results indicate that taxes have a substantial influence on intrafirm trade flows between U.S. parent firms and their affiliates abroad; the United States has less favorable intrafirm trade balances with low tax countries. This result is anticipated if U.S. sales to affiliates in low tax countries are underpriced and U.S. purchases from affiliates in high tax countries are overpriced. Taxes are also shown to have an influence on intrafirm trade flows between different foreign affiliates of U.S. firms.

Suggested Citation

Clausing, Kimberly A., The Impact of Transfer Pricing on Intrafirm Trade (August 1998). NBER Working Paper No. w6688. Available at SSRN: https://ssrn.com/abstract=122350

Kimberly A. Clausing (Contact Author)

Reed College - Department of Economics ( email )

3203 SE Woodstock Boulevard
Portland, OR 97202-8199
United States
503-517-7388 (Phone)
503-777-7776 (Fax)

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