Papers

Peer-reviewed Corresponding author International journal
Jan 28, 2025

Wake Not a Sleeping Lion: Free Trade Agreements and Decision Rights in Multinationals

Review of International Economics
  • Hiroshi Mukunoki
  • ,
  • Hirofumi Okoshi

Language
English
Publishing type
Research paper (scientific journal)
DOI
10.1111/roie.12790
Publisher
Wiley

Free trade agreements with rules of origin affect the location of input production for vertically integrated multinational enterprises. The relocation induced by a free trade agreement changes the allocation of decision rights within multinational enterprises and the purpose of transfer pricing from avoiding high taxes to strengthening their product market competitiveness. This study shows that a free trade agreement with rules of origin may hurt both a multinational enterprise and a local firm, despite tariff elimination, when the relocation occurs and the decision rights change from centralization to decentralization. Moreover, such a free trade agreement can hurt consumers. Nevertheless, rules of origin increase the feasibility of free trade agreements due to larger tax revenues.

Link information
DOI
https://doi.org/10.1111/roie.12790
Research Projects
多国籍企業の行動と課税に関する理論・実証分析
Research Projects
International Trade and Trade Policies in Two-sided Markets
Research Projects
Analysises on Tax Competition under Diversified Economic Integration: Interlink between Economic Integration
Research Projects
Studies on the interaction between transfer pricing of multinationals and trade policies
URL
https://onlinelibrary.wiley.com/doi/10.1111/roie.12790 Open access
ID information
  • DOI : 10.1111/roie.12790
  • ORCID - Put Code : 176799018

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