Abstract: This paper analyses the transfer pricing of firm under asymmetric information.The paper defines the discriminated transfer pricing method,which is while the upstream division has monopoly power on intermediat products,firm should allocate the decision authority to divisions.And divisions set discriminated price according different demand of internal and external.Comparing with the market transfer pricing and marginal cost transfer pricing,the paper draws the conclusion that discriminated transfer pricing can improve the total profit of the firm under asymmetric information.

Key words: firm, transfer pricing, discriminated pricing, asymmetric information