Suppose General Motors charges its Mexican subsidiary $1 million for auto assembly equipment that could be purchased on the open market for $800,000.This practice is best referred to as:

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The practice described is transfer pricing, where a company charges one of its subsidiaries an inflated or deflated price for goods or services, often for tax or cost allocation purposes. In this case, General Motors is charging its Mexican subsidiary more than the market price for the equipment, potentially to shift profits to a low-tax country or to allocate costs to a particular business unit. International dumping refers to selling goods below cost in a foreign market to drive out competition, cost-plus pricing is a method of setting prices based on adding a markup to the cost of production, and technological transfer refers to the transfer of know-how, techniques, or processes from one country to another.

Suppose General Motors Charges Its Mexican Subsidiary $1 Million for Auto