Abstract: This paper analyzes the transfer pricing of inter mediate products for a firm facingasym metric competition.It is proved that the transfer price strategy of interm ediate products depends on the asymmetry of upstream subsidiary company and its rival.If the asymmetry of upstream subsidiary company and its rival is higher,the firm should adopt the Hirshleifer's transfer pricing strategy in which the transfer price of intermediate products is equal to the marginal cost of interm ediate products.If the asymmetry of up stream subsidiary company and its rival is lower,the firm shouldadopt the transfer pricing strategy of part decentralized structure.

Key words: intermediate product, transfer pricing, firm