Growing foreign direct investments (FDIs) have been observed in parallel to the development of tax avoidance by multinational enterprises; however, empirical evidence indicates the asymmetric effects of trade costs on a firm’s entry decision. To give a new rationale and insights into the impacts of transfer pricing and trade liberalization on a firm’s global activities, this study incorporates transfer pricing and investigates a foreign firm’s entry decision: exports, greenfield FDI (GFDI), or cross-border mergers and acquisitions (CM&As). We show that CM&A is the equilibrium entry mode when transfer pricing regulation is loose, whereas the choice between exports and GFDI depends on the fixed costs of GFDI. Moreover, trade liberalization increases the likelihood of CM&A but decreases that of exports because a reduction in trade costs enhances tax-avoidance efficiency due to more intrafirm trade, implying that tax avoidance in the form of CM&A becomes crucial as globalization progresses. Our welfare analysis shows that regulating CM&A based on consumers’ benefits may result in welfare reduction because profit shifting is most effective under CM&A and a host country’s tax revenue from the foreign firm increases. The results imply the importance of considering the link between international tax and antitrust policies.

外国直接投资（FDI）的增长与跨国企业避税的发展同时发生；然而，经验证据表明贸易成本对企业进入决策的影响不对称。为了对转让定价和贸易自由化对公司全球活动的影响提供新的原理和见解，本研究纳入了转让定价并调查了外国公司的进入决策：出口、绿地外国直接投资 (GFDI) 或跨境并购（CM&A）。我们表明，当转让定价监管宽松时，CM&A 是均衡进入模式，而出口和 GFDI 之间的选择取决于 GFDI 的固定成本。此外，贸易自由化增加了CM&A的可能性，但降低了出口的可能性，因为贸易成本的降低由于公司内部贸易的增加而提高了避税效率，这意味着随着全球化的进展，以CM&A形式的避税变得至关重要。我们的福利分析表明，基于消费者利益来监管 CM&A 可能会导致福利减少，因为利润转移在 CM&A 下最为有效，并且东道国来自外国公司的税收收入增加。结果表明考虑国际税收和反垄断政策之间联系的重要性。