Multinational enterprises are organisations which engage in production or service activities outside the country in which they are incorporated. The maximisation of global profit and minimisation of risk are their major objectives. These objectives are largely achieved through the exploitation of market imperfections. Market imperfections arise from differentials in a country’s labour costs, educational levels, technology and political stability. International Transfer Pricing could be employed by multinational enterprises to ensure profit maximisation and risk minimisation from market imperfections.
KeywordsHost Country Parent Company Transfer Price Multinational Enterprise Market Imperfection
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