Operations and Supply Chain Management Commons^™

Virtual Transfer Pricing Mechanisms In Global Supply Chain, Kun Liao, Jie Jennifer Zhong

All Faculty Scholarship for the College of Business

Increasingly global firms establish plants across their national borders while utilizing their home country suppliers in diverse locations. In view of complex risk factors including political uncertainty, tax rate differences, exchange risks and labor condition changes, the issues of optimizing profits through their global operations have received much attention from both academic researchers and executives. Yet, little attention has been paid in regard to virtual transfer pricing in the global supply chain. In this paper, a virtual transfer pricing model is proposed by using contract bundle within a global supply chain to lower the risks and maximize the profit potentials.