Gray markets and multinational transfer pricing
By: Romana L. Autrey, Francesco Bova
Contributors: Bova, Francesco, 1953-; Harvard Business School
Edition: Rev. ed.
Series: Working paper / Harvard Business School -- 09-098; Working paper (Harvard Business School) -- 09-098.
Publisher: Harvard Business School
Published: 2009
Place of publication: [Boston]
Language: eng
Number of pages: 39
Description: Gray markets arise when a manufacturer's products are sold outside of its authorized channels, for instance when goods designated for a foreign market are resold domestically. One method multinationals use to combat gray markets is to increase internal transfer prices to foreign subsidiaries in order to increase the gray market's cost base. We illustrate that when a gray market competitor is present, the optimal price for internal transfers exceeds marginal cost, but decreases in the competitiveness of the upstream economy.
Notes: "February 2009, revised October"--Publisher's website.

Includes bibliographical references.