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Optimal regulation of MNEs and government revenues

Dasgupta, Sudipto and Sengupta, Kunal (1995) Optimal regulation of MNEs and government revenues. Journal of Public Economics, 58 (2). pp. 215-234. ISSN 0047-2727

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Abstract

The paper analyses the optimal regulation of multinational enterprises (MNEs) by a host government interested in maximizing tax revenues, when the MNE has private information about its benefits of controlling the enterprise. It is shown that the optimal mechanism involves restricting the MNEs ownership of the enterprise, and setting a ceiling on the transfer price of an input that the MNE provides that is above the known production cost of the input. For low realizations of the benefits of control, the MNE transfers control to a domestic partner, while for high realizations, it retains control.

Item Type: Article
Journal or Publication Title: Journal of Public Economics
Uncontrolled Keywords: Multinationals ; Regulation ; Asymmetric information ; Ownership ; Transfer pricing
Subjects:
Departments: Lancaster University Management School > Accounting & Finance
ID Code: 74571
Deposited By: ep_importer_pure
Deposited On: 07 Jul 2015 13:46
Refereed?: Yes
Published?: Published
Last Modified: 30 Aug 2017 14:44
Identification Number:
URI: http://eprints.lancs.ac.uk/id/eprint/74571

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