... the firm-wide profit. Internally, the allocation of profit might be used for performance evaluation and resource allocation decisions. However, profit allocation is most important for external ... taxes, and profit distributions of a division are proportional to its profit before compensation, taxation, and profit distribution. Consequently, the divisions only take their gross profits ... Finally, Balachandran and Li (1996) design a mechanism based on dual transfer prices, and Hyde and Choe (2005), Baldenius, Melumad, and Reichelstein (2004), Smith (2002b), and Elitzur and Mintz...