Illinibucks

Transfer pricing is the concept of how associated enterprises engaging in controlled transactions price their products or services. A controlled transaction is one in which (two or more) enterprises that are associated engage in business. In order for an enterprise to be associated, it must participate directly or indirectly in the controlled management or capital of another enterprise. Similarly, if the same people have control of the management or capital of two enterprises they are associated. The main goal of transfer pricing is to prevent companies from going against market terms for individual gain. It ensures that profits aren’t taxed where the value is created.

            There are many things on this campus that are allocated to students on a first come first serve basis. An example of this is a concert this weekend that is free to all students, however, there is a cap on how many people can attend. Implementing the concept of Illinibucks to allow students to jump the line would simultaneously create various benefits and problems. I believe that Illini bucks would be useful in University facilities such as the arc or other workout facilities. It would come useful for dodging the long lines that tend to build up throughout the day since there is a plethora of students and faculty on this campus. While this would benefit the students who use their Illinibucks to cut the line, the students who had been patiently waiting in line to get their workouts in would have been waiting for no good reason. Some students may have specific time schedules that disallow them to be able to use the Illinibucks they purchased for times when need be. Students could also take advantage of this by using Illinibucks during certain times where the arc is filled to the brim with students, which would ultimately cause people to either not be able to use machines or weights at the only time of day they can. It could also cause many wealthier students to overuse Illinibucks and create a problem of social inequality within the students on this campus.

            Creating a price point for Illinibucks would lead to problems from both ends of the spectrum. Pricing Illinibucks too low would cause an increase in quantity demanded, leading most students at this university to take advantage and purchase them. This, in turn, would cause Illinibucks to lose value over time and force students to use Illinibucks for services on this campus that they truly need. Furthermore, it would cause Illinibucks to become a norm at this University because with everyone buying them, their purpose of helping people get ahead would become obsolete. This would also cause people to use Illinibucks for only the functions they truly desire. An example could be that if I was a gym rat, I would use my Illinibucks to cut the line at the Arc instead of potentially using them to reserve study rooms in the library because the people who use the library regularly would be using their Illinibucks for that. On the other side, if the University set the price point for Illinibucks too high, it would cause a decrease in the quantity demanded and create a surplus of Illinibucks due to the fact that no one will want to purchase them at a higher price. This, in turn, would cause the value of the Illinibuck to increase. The heightened price could also cause the quantity supplied to decrease and again make the Illinibucks more valuable because fewer students are able and willing to purchase them. Overall, I would choose to use the Illinibucks if they were allocated to students at a lower price. Even though it would cause a “status quo” to be created and overall decrease the value of the Illinibucks, they would be useful for the tasks and facilities I value most. I would not, however, use them if the price were too high because even though it would cause the value to increase, I would not be willing to purchase Illinibucks at a higher price point.