All Rights Reserved
AccessEcon LLC 2006, 2008.
Powered by MinhViet JSC

 
Jumpei Hamamura, Momoe Hayashi and Koki Wada
 
''Customer-friendly sales division, transfer pricing, and the direct channel in the divisionalized firm''
( 2024, Vol. 44 No.3 )
 
 
In this note, we assess the usefulness of transfer pricing in the divisionalized firm, which is composed of the headquarters and customer-friendly sales division. In particular, based on recent management practice, we assume the existence of a direct channel to provide the products to the consumer. From our analysis, we find that while the divisionalized firm always opens a direct channel to reach the consumer, the customer-friendly sales division does not improve the profit without the transfer pricing. In particular, we obtain that the manipulation of transfer price yields that the total profit does not depend on the level of emphasis of the customer by the sales division. In other words, the headquarters coordinates the supplied quantity using the transfer pricing under the direct channel. This result indicates the importance of internal transfer pricing to manage the divisionalized firm in a recent situation.
 
 
Keywords: transfer pricing, divisionalized firm, customer-friendly sales division, dual-channel
JEL: M4 - Accounting and Auditing: General
L1 - Market Structure, Firm Strategy, and Market Performance: General
 
Manuscript Received : Dec 24 2023 Manuscript Accepted : Sep 30 2024

  This abstract has been downloaded 56 times                The Full PDF of this paper has been downloaded 166340 times