The central theme of Competition and Cost Accounting is that
strategic considerations may make it desirable for a firm to have
divisions and Product managers internalize something other than
their true costs. In the case of transfer Prices, a high transfer
Price serves as a means of promoting tacit collusion. When transfer
Prices are not observable to the rival firm, decentralization,
motivated by the superior knowledge of divisions about their own
costs, can promote tacit collusion. In the case of Product cost
Measurement, an inferior cost allocation system that just spreads
costs evenly can promote tacit collusion. The authors show that it
may not be an equilibrium for firms to adopt a more accurate cost
system or compete in multiple markets. The strategic nature of
their interaction with their rivals may influence their cost and
cost accounting choices in surprising ways. After an introduction,
the authors analyze the strategic value of transfer Prices in both
Bertrand and Cournot Settings. They demonstrate the importance of
observability and commitment, and show that even in the absence of
observability and commitment, decentralization to exploit the
private information of upstream managers can have strategic
consequences through double marginalization. These strategic
effects become stronger with observability and commitment. They
also analyze the strategic value of cost allocation systems in both
Bertrand and Cournot Settings before concluding the monograph.
General
Imprint: |
Now Publishers Inc
|
Country of origin: |
United States |
Series: |
Foundations and Trends (R) in Accounting |
Release date: |
April 2013 |
First published: |
March 2013 |
Authors: |
V. G. Narayanan
• Michael Smith
|
Dimensions: |
234 x 156 x 4mm (L x W x T) |
Format: |
Paperback
|
Pages: |
78 |
ISBN-13: |
978-1-60198-646-7 |
Categories: |
Books >
Business & Economics >
Finance & accounting >
General
|
LSN: |
1-60198-646-7 |
Barcode: |
9781601986467 |
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