Centralized vs. De-centralized Multinationals and Taxes

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Centralized vs. De-centralized Multinationals and Taxes

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Title: Centralized vs. De-centralized Multinationals and Taxes
Author: Nielsen, Søren Bo; Raimondos-Møller, Pascalis; Schjelderup, Guttorm
Abstract: The paper examines how country tax differences affect a multinational enterprise's choice to centralize or de-centralize its decision structure. Within a simple model that emphasizes the multiple conflicting roles of transfer prices in MNEs – here, as a strategic pre-commitment device and a tax manipulation instrument –, we show that (de-)centralized decisions are more profitable when tax differentials are (small) large. Keywords: Centralized vs. de-centralized decisions, taxes, MNEs. JEL-Classification: H25, F23, L23.
URI: http://hdl.handle.net/10398/7652
Date: 2005-11-08

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