Goliath Corporation: An instructional case in transfer pricing policy

Charles D. Bailey, Denton Collins

Research output: Contribution to journalArticlepeer-review

3 Scopus citations


This case illustrates some of the issues associated with setting firms' transfer pricing policies. The simulation requires students to assume the roles of top management and divisional management for Goliath Corporation in negotiating transfer prices. The student playing the role of top management first selects a transfer pricing policy from four possible mechanisms: market-based, cost-based, negotiated, and dual-pricing. Given the top manager's policy choice, divisional managers are then constrained to use that policy as they decide whether to purchase internally or externally based on their respective negotiations. In each negotiation, there is an ex ante best decision for Goliath as a whole. The case is thus useful in demonstrating how managers' transfer price policy choices can lead to bad sourcing decisions.

Original languageEnglish
Pages (from-to)264-276
Number of pages13
JournalJournal of Accounting Education
Issue number4
StatePublished - 2005


  • Experiential learning
  • Goal congruence
  • Transfer pricing


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