Multinational Enterprises
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Multinational Enterprises: The primary concept in this section is the practice of transfer pricing and the potential for inefficiency caused by double markup or double marginalization. The analysis is algebraic, but a graphical treatment is possible as well. To construct the appropriate diagram one simply needs to point out that if both an upstream and downstream division possess market power, that the marginal revenue function of the downstream firm plays the role of demand for the upstream one.

