Moral Hazard Aversion On Tax-efficient Supply Chain Under Information Asymmetry

With the rapid development of economic globalization and the gradual formation of the world market,multinational corporations have rapid development as the times require.The emergence and development of multinational corporations have had a profound impact on traditional supply chain management.Multinational corporations have branches all over the world,their capital can flow globally.However,the tax systems vary greatly from country to country due to many factors,such as political,economic,and resource.For example,the US tax rate is as high as 35%,the Japanese tax rate is 32.11%,while Switzerland is only 17.92%,and Hong Kong is 16%.Then,tax avoidance has gradually become an important topic in the management of supply chain.Besides,with the increasingly fierce competition in global trade,more and more multinational companies are improving their own management systems and internalizing supply chain transactions in order to reduce the volatility of external market transactions and improve the efficiency of supply chain operations.The most widely used method is the cost-plus-transfer method.The transfer price can not only obtain significant tax-saving advantages,but also maximize the overall after-tax profit of multinational companies,and also reduce external transaction costs,prevent external supply disruptions,and enable companies to continuously make decisions.At present,many multinational corporations have established tax avoidance through establishment of branches(procurement centers,etc.)in low-tax countries,forming an overseas procurement center-cross-border transaction supply chain for domestic retailers.The effective tax supply chain has gradually become a field of concern for scholars at home and abroad,which mainly focuses on four aspects:the study of transfer price strategy,the impact of Arm's Length Principle on transfer price decision,the influence of external competitors or value-added tax on the decision-making of multinational corporations,and the study of moral hazard in branch of multinational corporations.This paper considers a three-echelon supply chain consisting of one headquarters(HQ),one overseas procurement center(PC)and one rerailer(R).First of all,this article respects the economic practice of multinational corporations,the retailers make their own decision based on their income.Retailer faces random market demand,and orders products through classic newsvendor model.Secondly,we analyzes the moral hazard behavior of the procurement center,that is,the procurement center fail to perform the function of cutting the price of material price.Then we introduces the level of effort as a decision variable to further reveal the moral hazard behavior under information asymmetry.In this regard,it is necessary to establish a reasonable and effective supply chain contract,which can link the revenue of the procurement center with the effort level,then we design the incentive mechanism and restructure the supply chain structure under a random demand situdation.In particular,the results show that optimal incentive intensity decreases in tax difference,and the optimal supply chain profit exhibit interesting non-monotone behavior about tax difference.Finally,moral hazard phenomenon in Starbucks is further revealed,and the theoretical results are verified by numerical examples.