Gray Markets and Multinational Transfer Pricing

A shift to arm's-length transfer pricing erodes domestic consumer surplus by making the gray MARKET less competitive domestically.

In the presence of a gray market, the transfer price that maximizes a multinational's profits may also be the same one that maximizes the social welfare of the domestic economy that houses it.

Website:  http://www.arjonline.org/engineering/american-research-journal-of-computer-science-and-information-technology/