Article
Foundations and Trends® in Accounting

Competition and Cost Accounting

By: V.G. Narayanan and Michael Smith

Format:Print

Abstract

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. In the case of product cost measurement, an inferior cost allocation system that just spreads costs evenly may promote tacit collusion.

Keywords

Cost Allocation; Transfer Pricing; Decentralization; Bertrand And Cournot Competition; Cost Accounting

Citation

Narayanan, V.G., and Michael Smith. "Competition and Cost Accounting." Foundations and Trends® in Accounting 7, no. 3 (2012): 131–195. (Published: 11 April 2013.)