Transfer pricing: a fair and neutral procedure

  • Clive R. Emmanuel
  • Kenneth P. Gee


This paper presents a fair and neutral transfer pricing procedure for a divisionalized company. ‘Fairness’ is said to be present where there is a minimum of discrimination against the transferor (selling division) or the transferee (buying division). It requires that divisional managers should agree upon how to price internally traded goods, and that any manager should be able to verify that any transfer price charged has been computed consistently with the agreed procedure. ‘Neutrality’ is present where there is the minimum inducement for the profit-seeking managers of either the buying or the selling division to arrive at decisions inconsistent with profit-seeking by the divisionalized company as a whole.


Variable Cost Corporate Management Transfer Price Quantity Discount Internal Price 
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Copyright information

© Springer Science+Business Media Dordrecht 1982

Authors and Affiliations

  • Clive R. Emmanuel
  • Kenneth P. Gee

There are no affiliations available

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