Transfer Pricing Price Bundling

Transfer Pricing is the determination of the price of the talk terms merchandises sell by one semi-autonomous division of the same loaded. It is essential in determine the optimal output of each division and of the firm as a whole, and in evaluating divisional performance and determining divisional rewards. The correct transfer price for an intermediate overlap for which there is no external market is the marginal appeal of harvest-homeion. When a perfectly competitive external market for the intermediate product exists, the transfer price for intra-company sales of the intermediate product is given by the external competitive price for the intermediate products. When an intermediate product give the gate be sold in an imperfectly competitive market, the transfer price of the intermediate product is given at the point where the net marginal tax of the marketing division of the firm is equal to the marginal hail of the production division at the best total take of output of the intermediate product and the price charged in the external market is given on the external get curve.

Product Bundling is the employ of selling two or more products together for a single price. When the products are entirely available as a package, the pricing strategy is referred to as pure bundling.



If at least some products also can also be purchased separately, then the firm is using conflate bundling. Examples are complete meals offered in some restaurants, cars sold with air-conditioners, antilock brakes, cassette-decks at “no-extra” price, season tickets packages with ticket for a popular game and a not so popular one etc. or so advantages of product bundling which has made it a common practice are:

(a)Firms can reduce their production and marketing cost by packaging goods and services in this way,
(b)It allows firms to increase their wampum by extracting additional consumer surplus,
(c)It requires less information about tastes and preferences of customers.If you indigence to get a full essay, order it on our website: Ordercustompaper.com



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