Transfer Pricing--A Synthesis.

Abstract

Abstract The article discusses the nature and scope of major transfer pricing models. The purpose of transfer pricing systems is to generate prices for internally produced and consumed commodities. The authors examine the capability of various transfer pricing models to handle the issues of organizational decentralization and optimization. The analysis takes into consideration the development of transfer pricing models in three categories. They are the economic theory of the firm, mathematical programming approaches, and other analytic approaches.