Politics of Intra-firm Trade: Corporate Price Planning and the Double Role of the Arm’s Length Principle

Matti Ylönen*, Teivo Teivainen

*Corresponding author for this work

Research output: Contribution to journalArticleScientificpeer-review

7 Citations (Scopus)
108 Downloads (Pure)


Intra-firm trade is an emerging issue. One of its key elements is the international shifting of profits, for example, through transfer pricing that big enterprises use to cross-subsidise their subsidiaries, often to avoid taxes. Accounting rules conceal much of the information about transfer pricing, reproducing secrecy and facilitating the use of administered prices. Given the prevalence of administered price setting, a significant amount of international trade cannot be meaningfully analysed as market transactions. This provokes questions about the validity of market assumptions in research on trade in particular and global capitalism more generally. Our specific contribution focuses on the role of the arm’s length principle and the significance of cross-subsidisation and other forms of corporate planning in intra-firm trade. Under certain conditions, price planning by private corporations should be analysed as political rule within the economic sphere. Since the politics of the world economy is not merely related to governmental intervention, corporations should also be theorised as potentially political entities. Crossing the disciplinary boundaries between political economy and normative political theory, we suggest that the politicisation of intra-firm trade opens possibilities for creating more effective responses to price administration and for creating more democratic ways of governing the global economy.

Original languageEnglish
Pages (from-to)441-457
Number of pages17
Issue number4
Early online date2017
Publication statusPublished - 4 Jul 2018
MoE publication typeA1 Journal article-refereed


  • arm’s length principle
  • economic planning
  • intra-firm trade
  • Transfer pricing
  • transnational corporations

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