rate of return on capital

[christian11 at mindspring.com]

Couldn't it inhibit investment if the sale of capital goods to the LDC subsidiary generated more taxable income than the manufacturing made up for? Or, if the transfer price were below market price, then wouldn't the manufacturing enterprise lose depreciation allowances as well as capital sales for the first world firm?

Christian 

On Tue, 16 Apr 2002 15:35:55 -0400 Max Sawicky <sawicky at bellatlantic.net> wrote:

I would think the opposite.  TP facilitates location of production
activities
to lower-tax rate jurisdictions.   -- mbs


>
>
> Could transfer pricing be playing a role in lowering LDC investment?
> --
> Michael Perelman
> Economics Department
> California State University
> Chico, CA 95929
>
> Tel. 530-898-5321
> E-Mail michael at ecst.csuchico.edu
>