Vertically integrated firms can use transfer pricing
A)to avoid government price controls.
B)as a way to compensate managers for transferring among departments in a vertically integrated firm.
C)to avoid paying market prices for inputs.
D)to shift profit.

Question

Quizplus · Accepted Answer

Vertically integrated firms can use transfer pricing to shift profits from higher tax jurisdictions to lower tax jurisdictions, thereby reducing their overall tax liability.

Vertically Integrated Firms Can Use Transfer Pricing