A Risk Management Strategy under Transfer Pricing for Multi-National Supply Chain along the Belt and Road Initiative

Round 1

Reviewer 1 Report

Comments and Suggestions for Authors

Obviously, solving the problem of compensating for the uncertainty of transfer pricing by increasing the cost by reducing the quantity of goods or reducing the cost by increasing the quantity of goods will not solve the problem of filling the market due to uncertainty in consumer supply of goods, which in turn will jeopardize the manufacturer's profit. 

The CR mode, despite its attractiveness, due to the uncertainty and variability of transfer pricing, leads to an additional risk of loss of the consumer, due to the discrepancy between the expected utility effect on the basis of "price - necessity", which in turn provokes the buyer to search for new suppliers with a more understandable product pricing trajectory.

The research provides conditions for the risks of changes in the exchange rate towards an increase in the price of goods, while fluctuations in the exchange rate can also cause a decrease in the transfer price of goods, which will adjust the conclusions in the developed algorithms from the perspective of ensuring a balance of common benefits and risks of the group.

The authors conclude that it is possible to manage risks with the variability of transfer pricing through the insurance of transactions to sellers, which will ensure the stability of the pledged profit.

The presented provisions are applicable, but it should still be noted that the proposed transfer pricing solutions (the "cost plus" strategy) are not considered taking into account the competitiveness of the product, the impact of saturation on the market of the same type of product with a variable component at the stage of cost formation, the "costs" article, which significantly changes the risk management strategy.

And if we consider that the authors attribute the quality of the product and its attractiveness to the category of "seller's psychology" and "consumer psychology", although this is not reflected in the research.

Note: Line 506, 530, etc. (in terms with the condition of the results of mutual influence with a negative value) it is unclear how to ensure the stated condition when, at a given value of the base cost of goods, transfer pricing cannot lead to its reduction, i.e. in all variants, the "cost plus" strategy is indirectly present. There is no clear explanation of the accepted condition in the text.

Author Response

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Reviewer 2 Report

Comments and Suggestions for Authors

The Belt and Road Initiative (BRI) has increased international trade, making exchange rates and taxes important issues for multinational companies. Therefore, managing exchange rate risk and tax planning should be central to the decisions made within multinational supply chains. This paper develops a Stackelberg game model with four composite strategies to examine how retailers handle risk and hedge their positions, considering their psychological tendencies regarding reference points. Excellent results were achieved and can be summarized as follows: 1) Transmission of Exchange Rate Risk, 2) Motivation to Manage Risk, and 3) Impact of Futures Hedging. 

Comments on the Quality of English Language

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Author Response

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Reviewer 3 Report

Comments and Suggestions for Authors

The paper „Risk management strategy under Transfer pricing for multi- national supply chain along the Belt and Road Initiative” is an interesting paper with possible practical implementations. The article is clear and presented in a well-structured manner. The paper meets scientific standards. English is fine and is pleasant to read. The paper addresses the 3 research questions by providing insights into the interaction between transfer pricing strategies and exchange rate risk, the paths through which risk is transmitted, and the impact of psychological factors on risk management decisions. The manuscript has the following remarks, recommendations and comments:

1. What is innovative about the manuscript? It is recommended that the innovation be reflected in the paper.
2. The article lacks a discussion of its limitations. It is recommended that a discussion of the limitations of the study be added.
3. The format of the bibliography in the manuscript needs to be improved. Please make revisions.

Author Response

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