Document Type
Journal article
Source Publication
Operations Research Letters
Publication Date
9-1-2012
Volume
40
Issue
5
First Page
364
Last Page
369
Publisher
Elsevier BV
Keywords
Transfer price; Cooperative game theory; The core; Shapley value
Abstract
We 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.
DOI
10.1016/j.orl.2012.04.009
Print ISSN
01676377
E-ISSN
18727468
Funding Information
The first author (Mingming Leng) was supported by the National Natural Science Foundation of China under Grant No. 70901036.
Publisher Statement
Copyright © 2012 Elsevier B.V. All rights reserved. Access to external full text or publisher's version may require subscription.
Full-text Version
Accepted Author Manuscript
Language
English
Recommended Citation
Leng, 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