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Compensation and Transfer Pricing in A Principal-Agent Model
Oleh:
Besanko, David
;
Sibley, David S.
Jenis:
Article from Bulletin/Magazine
Dalam koleksi:
INTERNATIONAL ECONOMIC REVIEW vol. 32 no. 1 (1991)
,
page 55-68.
Topik:
PRICING
;
compensation
;
transfer pricing
;
principal -agent model
Ketersediaan
Perpustakaan Pusat (Semanggi)
Nomor Panggil:
II49
Non-tandon:
1 (dapat dipinjam: 0)
Tandon:
tidak ada
Lihat Detail Induk
Isi artikel
This paper studies transfer prices and compensation mechanisms in a principal -agent model with moral hazard and private information by the agent. Production requires unobservable effort by the agent and a purchased input. In general it is optimal for the principal to create an internal market for the input and charge the agent a tax or subsidy which differs from the market price. Conditions are found under which the optimal compensation function is given by the difference between a nonlinear "revenue" function depending only on output and a nonlinear transfer pricing function which depends only on the amount of the purchased input.
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