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Transfer pricing in a multidivisional firm : a cooperative game analysisOperations Research Letters
Document TypeJournal article
- Transfer price; Cooperative game theory; The core; Shapley value
AbstractWe consider the transfer pricing decision for a multidivisional firm with an upstream division and multiple downstream divisions. The downstream divisions can independently determine their retail prices, and decide on whether or not they will purchase from the upstream division at negotiated transfer prices. To allocate the firm-wide profit between upstream and downstream divisions, we construct a cooperative game, show the convexity of the game, and then compute the Shapley value-based transfer prices for the firm.
Publisher StatementCopyright © 2012 Elsevier B.V. All rights reserved. Access to external full text or publisher's version may require subscription.
Citation InformationLeng, M., & Parlar, M. (2012). Transfer pricing in a multidivisional firm: A cooperative game analysis. Operations Research Letters, 40(5), 364-369. doi: 10.1016/j.orl.2012.04.009