PUBLICATIONS

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Desjardins, M., and Sinclair-Desgagné, B. (2025). Internal Carbon Pricing in the Multidivisional Firm. Environmental & Resource Economics. 88(8). pp. 2029-2057. [ Online version ]

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Nowadays, most large multidivisional businesses, multinational enterprises and global value chains hold their own ‘internal markets’, which they operate through so-called ‘transfer prices’. In response to environmental regulation and public pressure, many such firms are seeking to incorporate the cost of pollution in these transfer prices. Called internal carbon pricing, this emerging practice consists in charging an extra fee to each business unit based on its emissions. Modeling two vertically related subsidiaries located in different jurisdictions, we examine how such modified transfer prices would thereby convey regulations and public pressure, and consider the impact on each subsidiary’s production and emissions abatement. Transfer pricing is already a well-known common practice for fiscal optimization. We thus also show how the firm’s environmental strategy might now interact with fiscal compliance. Through transfer pricing, finally, a carbon fare in one jurisdiction can have an incidence on the other jurisdiction’s subsidiary; implications for environmental governance are discussed.

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WORKING PAPERS

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Internal Carbon Pricing: A Price to Cope with Organizational Failure [ Online version ]

with Marco Ghitti, Gianfranco Gianfrate, and Bernard Sinclair-Desgagné

Featured in the Finance, Economics and Banking Research Network (FEB-RN) Research Papers Series.

Submitted.

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The Good, the Bad, and the Ugly: Disentangling the role of Internal Carbon Pricing in Corporate Tax Avoidance

Extended abstract available upon request.​​

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WORK IN PROGRESS

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Coping with Adverse Specialization in Multitasking

Preliminary draft available upon request.

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Unpacking the Microfoundations of Circular Business Model Innovation

with Nabila Arfaoui, Olivier Brette, and Nathalie Lazaric

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