If an intermediate market exists but divisions are prohibited from buying or selling from the outside,the intermediate market can be ignored in determining the optimal transfer price.

Question

Quizplus · Accepted Answer

If divisions are prohibited from buying or selling from the outside, then the outside price becomes irrelevant, and the intermediate market becomes insignificant in determining the optimal transfer price. Therefore, the intermediate market can be ignored.

If an Intermediate Market Exists but Divisions Are Prohibited from Buying