Munich Personal RePEc Archive

Perverse Intra-Firm Trade

Kant, Chander (1989): Perverse Intra-Firm Trade. Published in: Southern Economic Journal , Vol. 56, No. 1 (April 1989)

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This paper shows that linkages between domestic costs and direction of intra-firm trade break down when the multinational firms (MNFs) face tax rate differentials. Thus, in the context of MNFs, conclusions drawn on the assumption of equal or nonexistent tax rates cannot be assumed to extend to the general case of unequal tax rates. Further, saving on profit taxes itself can be a powerful motive for internalisation.

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