The Economics of Advance Pricing Agreements

Files in This Item:
File Description SizeFormat 
WP14_19.pdf899.09 kBAdobe PDFDownload
Title: The Economics of Advance Pricing Agreements
Authors: Becker, Johannes
Davies, Ronald B.
Jakobs, Gitte
Permanent link:
Date: Nov-2014
Online since: 2014-11-12T10:31:25Z
Abstract: Advance pricing agreements (APAs) determine transfer prices for intra-firm transactions in advance. This paper interprets these contracts as a means to overcome a hold-up problem that occurs because governments cannot commit to non-excessive future tax rates. In addition, with private information, just as in practice, our APAs will be complex and require lengthy negotiations. Never- theless, implemented APAs lead to a Pareto improvement even when all agents are risk neutral. However, not all efficient APAs are concluded in equilibrium. International agreements to avoid double taxation will likely reduce the number of realized APAs.
Type of material: Working Paper
Publisher: University College Dublin. School of Economics
Series/Report no.: UCD Centre for Economic Research Working Paper Series; WP14/19
Copyright (published version): 2014 the authors
Keywords: Advance pricing agreementsCorporate taxationMultinational firmsTransfer pricing
Other versions:
Language: en
Status of Item: Not peer reviewed
Appears in Collections:Economics Working Papers & Policy Papers

Show full item record

Google ScholarTM


This item is available under the Attribution-NonCommercial-NoDerivs 3.0 Ireland. No item may be reproduced for commercial purposes. For other possible restrictions on use please refer to the publisher's URL where this is made available, or to notes contained in the item itself. Other terms may apply.