In this paper we analyze strategic transfer pricing with risk- and effort-averse divisional managers. In contrast to earlier literature, we find that the existence of a standard agency problem allows transfer pricing to serve as a commitment device even if the transfer prices are not mutually...

This paper analyzes the efficiency of three simple cost-based pricing heuristics in a twoperiod capacity planning model with uncertain demand. All policies start with full cost introductory prices but differ in second-period pricing. Under “adaptive full-cost pricing”, the firm updates...

We study the optimal accounting policy of a financially constrained firm that pledges assets to raise debt capital for financing a risky project. The accounting system provides information about the value of the collateral. Absent accounting regulation, the optimal accounting system is...