Publication Type: Conference Paper/Unpublished Manuscript
Abstract: Standard models of crisis bargaining blame the problem of inefficient demands and war on uncertainty arising from informational asymmetries. The assumption is that leaders are incompletely informed about their adversary, but are completely and accurately

Publication Type: Conference Paper/Unpublished Manuscript
Review Method: Peer Reviewed
Abstract: First Draft - INCOMPLETE -- Not for Circulation ----------------------- HARD BARGAINS: Examining Transfer Pricing Disputes through the Lens of the Obsolescing Bargain Model Lorraine Eden Professor of Management Texas A&M University -------------------- INTRODUCTION The best-known model of relations between multinational enterprises and host country governments is the obsolescing bargain model (OBM), first developed by Raymond Vernon in Sovereignty at Bay (1971). OBM explains the changing nature of bargaining relations between a multinational enterprise (MNE) and host country government (HC) as a function of goals, resources and constraints on both parties (Vernon, 1971, 1977; Kobrin, 1987; Brewer, 1992; Grosse & Behrman, 1992; Grosse, 1996). In OBM, the initial bargain favors the MNE, but relative bargaining power shifts to the host country government over time as MNE assets are transformed into hostages. Once bargaining power shifts from the MNE to the host country, the government imposes more conditions on the MNE, ranging from higher taxes to complete expropriation of MNE assets. Thus, the original bargain obsolesces, giving OBM its name. Originally applied as an explanation for widespread expropriation and nationalization in the 1970s of MNE natural-resource subsidiaries located in developing countries (Vernon, 1977), OBM was later tested in other situations such as manufacturing MNEs and developed HCs, with much weaker results (Kobrin, 1987). The widely held view among international business scholars is that the obsolescing bargain model has outlived its usefulness. The many case studies testing the model suggest that MNEs were able to retain relative bargaining power and prevent opportunistic behavior by HC governments so the bargains, in practice, seldom obsolesced. In addition, today, few governments restrict inward FDI, either in the form of screening or performance requirements, so that little formal bargaining over entry occurs between MNEs and host governments. To the extent entry bargaining does occur, it is mostly at the local level as cities compete in so-called 'locational tournaments' to attract new investments. Thus, host governments have shifted from 'red tape' to 'red carpet' treatment of foreign MNEs. MNE-government relations are now seen as cooperative, not conflictual (Dunning, 1993a; Stopford, 1994; Luo, 2001). As a result, there appear to be few areas where OBM applies. A recent paper by Eden, Lenway and Schuler (forthcoming) refutes this view. They argue that OBM has long term usefulness as a theoretical model of MNE-state relations once the twin emphases on 'entry' and 'obsolescing' are removed. They propose that IB scholars revitalize OBM by reconceptualizing OBM as a political bargaining model (PBM). In their political bargaining model, MNE-state relations are modeled as iterative political bargains negotiated between MNEs and governments over a wide variety of government policies at the industry level. Their model updates the obsolescing bargain model by incorporating recent insights from the liability of foreignness, transaction cost economics and the resource based view literatures. They argue that 'obsolescing bargain' can be reconceptualized as 'political bargaining' if, first, scholars broaden the issue area from a focus on ownership shares and recognize that firms and governments engage in iterative bargaining over a wide variety of government policies at the industry level. MNE entrants want to not only maintain the original bargain but also search for new bargains that will enhance their competitive position. Obtaining favorable outcomes in these public policy debates is critically important to firm competitiveness and performance. Second, even if MNE-state relations are cooperative and not conflictual in nature, democratic governments must also take into account the interests of other stakeholders (e.g., consumers, labor groups, nongovernmental organizations) and commitments (e.g., membership in international organizations, bilateral and regional accords) so that, in practice, MNEs must bargain for favorable public policies. Many of these favorable policies may also contribute to host country economic growth and have the effect of creating more resources for both the company and the country. Lastly, the essential insight of OBM -- that bargaining processes and outcomes depend on the parties' goals, resources and constraints - can and should be retained in PBM, even if MNE-state bargains do not obsolesce. PBM is therefore a powerful tool for analyzing MNE-state relations, which includes OBM as a special case. Our paper builds on the Eden, Lenway and Schuler paper by applying their model to transfer pricing disputes between national governments and multinationals. We argue that the central insight of OBM - that outcomes depend on goals, resources and constraints of the parties to the dispute - applies to transfer pricing disputes. We test this argument using the responses to a survey of North American transfer pricing professionals. In the survey, these professionals were asked to describe a typical transfer pricing dispute that they had observed, and to evaluate the absolute and relative goals, resources and constraints of the parties involved, and the outcomes. Using their responses, we apply central insights from OBM to analyze the outcomes of transfer pricing disputes. Our paper contributes to the international political economy literature on MNE-state relations in several ways. Most importantly, we offer a direct test of the OBM. While there have been many case studies employing OBM as a theoretical framework (Moran 1985, Jenkins 1986, Eden and Molot 2002), there have been few empirical (econometric) tests of OBM. The few that have been done (Grosse 1996, Kobrin 1987, Vachani 1995) have all used the share of equity held by the MNE in its foreign subsidiary(ies) as the dependent variable for measuring bargaining outcome. At best, equity share is a poor proxy for either the MNE's or the government's goals in the host country. In our paper, we have a bargaining outcome measure that is directly related to the goals of the two parties: the winner of the transfer pricing dispute. Our narrower dispute, with its more circumscribed outcome, enables us to provide a better test of the relative importance of goals, resources and constraints as factors affecting bargaining outcomes. TRANSFER PRICING DISPUTES Transfer pricing -- the pricing of crossborder intrafirm transactions between related parties -- used to be a term known only to a few international tax specialists. No longer. Transfer pricing is now the top international taxation issue faced by multinational enterprises (MNEs) according to surveys (Ernst and Young 1999). The reasons for this change are not hard to understand. Since every crossborder transaction means that two governments and one multinational enterprise are involved in regulating the transfer price, there is always the possibility for conflict. MNEs see differences in corporate income taxation systems as exogenous market imperfections that can be arbitraged through tax avoidance strategies, such as tax deferral, financial maneuvers (e.g., double dipping) and transfer price manipulation (over or underinvoicing intrafirm transfers of goods, services or intangibles). Concerns about inappropriate (too much or too little, but particularly too little) tax paid by the MNE have led national tax authorities to devise evermore sophisticated national tax systems to regulate transfer pricing. Moreover, disputes between home and host governments over MNE taxes had led national tax authorities to reach out to the international level to device a series of bilateral and international institutional responses, organized around the concept of the arm's length standard. In 1995, the OECD issued new transfer pricing guidelines for its member states; the new guidelines have generated a domino-like round of changes in both OECD and non-OECD member countries (Eden, Dacin and Wan, 2001). Under the corporate income tax, governments normally tax the net income of firms located in their jurisdictions, minus any tax deductions or credits. Net income is defined as gross revenues (product sales to households and other firms, royalty income, license fees, etc.) minus cost of goods sold (factor costs, purchased materials), general expenses, and other allowable expenses. Where buyers and sellers are unrelated (that is, at arm's length), governments accept their intermediate and final product prices as being determined in the market place. However, where the firms are related, governments insist that the MNE prove that its transfer prices are equivalent to those that would have been negotiated by unrelated parties engaged in comparable transactions (the so-called arm's length standard), or the national tax authority will substitute its calculation of arm's length prices for the MNE's transfer prices (Eden, 1998). At the national level, most transfer pricing disputes occur behind closed doors between large case tax auditors and MNE tax departments. The negotiations take place over several years, from the date of the first tax audit through to the completion (win, lose) of enormously complicated tax court cases that can cost millions of dollars. Only at the last stage, if the negotiations end up in tax court, is the bargaining made public. Given that most intrafirm trade takes place within the Triad, where tax rates are roughly similar, real disputes can arise over apportionment of the MNE's tax base between the two tax jurisdictions, not just between the MNE and the nation state. Where tax rates are the same, the location of the tax base determines which country has the right to tax and therefore which government will receive most or all of the tax revenues. Since jurisdiction rules (i.e., which country has the right to tax which income) are seldom changed, transfer pricing policies are a second method by which national governments can reallocate taxable income in their favor. Double taxation is more likely when governments engage in confiscatory transfer pricing policies. To quote one transfer pricing expert: With the development of the global economy, it is estimated that over 90 per cent of current transfer pricing disputes concern two or more developed (and high-tax) countries in which an MNE conducts operations, each taking a different view of what the MNE's pricing policy on a particular transaction should be. Each country is concerned with protecting its own share of tax take; tax avoidance, as such, is not the real issue. (Pagan 1994: 163) At the international level, most OECD countries have negotiated bilateral tax treaties to define the tax base, set up transfer pricing rules, and arrange for dispute settlement procedures under so-called competent authority provisions. If an MNE loses a transfer pricing dispute with one government and must pay additional income tax to that government, the firm can seek compensatory relief from the second government. The two governments meet from time to time under the competent authority provisions to discuss these disputes. The second government may or may not agree to provide tax relief to the MNE. Where relief is not provided, the MNE suffers from double taxation. THEORY DEVELOPMENT In developing a political bargaining model (PBM) of transfer pricing disputes we retain the core components of OBM but (1) update them with insights from Eden, Lenway and Schuler (forthcoming) and (2) recast them in the context of tax disputes between MNEs and national governments. We break our analysis into the core components of OBM: similarity of goals, relative stakes, resources, constraints, and finally, the bargaining outcome. Similarity of Goals We assume that both parties have goals they want to accomplish and that one party achieves goals that they believe salient at the expense of the other party. The (dis)similarity of interests between the two parties and the extent to which they frame their interests as zero sum affects the anticipated difficulty of the negotiations (Grosse & Behrman 1992). The more similar the goals, the less difficult the bargaining process and the less need for the host government to regulate and/or coerce the MNE into activities seen as beneficial by the host country. MNEs and host governments tend to have dissimilar goals when they perceive that one will benefit at the expense of the other. OBM assumes the MNE and HC's goals are inherently conflictual in nature. The conflict arises because MNEs are integrated businesses consisting of many affiliates located in a variety of countries, where all units are under common control and share common strategic goals and resources. Nation states, on the other hand, are the ultimate location-bound asset, limited in their sphere of action by geographic borders. Thus, MNEs and host countries are assumed to have divergent goals. In Eden, Lenway and Schuler (forthcoming), MNEs and nation states can have either conflictual or complementary goals. In the case of transfer pricing disputes, the traditional OBM assumption can be expected to apply; that is, the goals of the two parties are conflictual. Tax disputes can be zero-sum games; that is, additional taxes paid by the MNE to the government come directly from the firm's cash flows. While the firm may be reimbursed through the competent authority process under the bilateral tax treaty between the two governments, tax relief is not guaranteed and may take years to be finalized. Relative Stakes The size of the stakes (how important the negotiations are to each party) can also affect MNE-HC bargaining and the outcome. While each party has general goals it hopes to accomplish, the importance each party attaches to the negotiations may differ. The stakes depend on the availability of alternatives to each party (i.e., the next best available alternative should deadlock occur), the importance of this particular negotiation to each party in the context of the overall MNE-HC relationship, and the importance of this negotiation in the context of each party's overall interests. For transfer pricing disputes, we expect each dispute to have high salience for the MNE since additional taxation has an immediate, negative impact on cash flows. In addition, the dollar amounts involved in the dispute can be astronomical. On the other hand, for the tax authority, disputes that are settled early in the process are typically of lower salience than those that go to tax court since the government is typically unwilling to go to court unless the stakes are large. The climate of the negotiations (friendly or bitter) can also affect the negotiations. Relative Resources The second issue is the relative resources possessed by each party. Both parties are assumed to possess assets or resources that are valuable to the other. In the obsolescing bargain model, the MNE's resources are its firm specific assets (FSAs) that are difficult to imitate, such as patented technology, brand names and trade secrets. The HC's resources are the size of its local market and its country specific advantages (CSAs); typically subdivided into economic, sociocultural and political-legal (dis)advantages. In OBM, the value of each party's resources is measured, not by its owner's evaluation, but by the other party's desire for those resources. The other party's valuation depends on the strength of desire/need for the particular resource and on what other alternatives are available should this negotiation fail. The political bargaining model incorporates insights from the resource based view (Barney 1991) into OBM. HC bargaining power is stronger when the host country has rare and location-bound CSAs that are desired by the MNE (e.g., central location in a region for efficient logistics, large and growing national market, valuable natural resources). MNE bargaining power is stronger when the HC wants FSAs that are inimitable and in scarce supply (e.g., sophisticated technology). In transfer pricing disputes, each party to the dispute has a range of resources on which to draw for support. We group these into three categories: people resources (lawyers, accountants, transfer pricing experts, economists), information resources (the MNE's books and records, statistical reports on markets and prices), and financial resources. Potential Bargaining Power Bargaining power comes from the ability to withhold resources that the other party wants. The valuation each party places on the other's resources determines its potential bargaining power. We argue that potential bargaining power is measured by the breadth and depth of the resources each party can command, and that the outcome of the dispute should favor the party with the stronger (absolute and relative) resources. Relative Constraints The exercise of potential bargaining power, which depends on each party's resources as valued by the other party, can be reduced by exogenous constraints. Constraints on HC bargaining power can be political (e.g., a weak, politically unstable government that lacks legitimacy or the HC's actions are restricted by international agreements) or economic (the HC suffers from balance of payments difficulties). Constraints on the MNE's bargaining power can also be political (previous commitments to the host or home country or legal restrictions on its activities) or economic (restrictions imposed on the subsidiary by its parent firm). Thus, constraints can be either internal (within the MNE and HC) or external (imposed by third parties or external institutions). In transfer pricing disputes, we argue each party can be constrained in one of four ways: people constraints (insufficient or poorly prepared employees), information constraints (lack of access to relevant information), financial constraints (lack of financing) and regulatory constraints (limitations placed by government regulations). The greater the financial constraints, the smaller the party's actual bargaining power and the less likely it is to win a dispute. Actual Bargaining Power The existence of economic, political and institutional constraints suggests that actual bargaining power may be greater or less than potential power, depending on several factors: the resources controlled by one party and demanded by the other, the similarity of interests and relative stakes attached to the negotiation, the constraints on each party, and the ability of either party to limit the behavior of the other party directly through economic or political coercion. Bargaining Outcome The outcome of the policy negotiations should tip in favor of the party with the strongest actual bargaining power. The 'winner' in the negotiations is defined by comparing the outcome to the goals of each party; the one whose goals are most closely achieved is the winner. Both parties win if they believe the policy outcome will be ultimately beneficial for them. In terms of transfer pricing disputes, 'winning' involves several factors. Since these disputes often can go on for 10-15 years before final settlement, we argue that the total time involved in the dispute affects the outcome. In addition, the level at which the dispute is finally settled (with the local tax authorities, at tax court, or under a bilateral tax treaty) affects the quality of the win. Other Factors Finally, other factors can affect the outcome of a transfer pricing dispute that should be taken into account. First, the type of dispute in terms of the products involved can affect the outcome. Transfer pricing is less contentious for some products (e.g., tangibles) than for others (e.g., intangibles) because arm's length prices are more readily available. We argue that the MNE is more likely to win when the arm's length standard is difficult to apply. Second, if a second government intervenes in the tax case on behalf of the MNE, the outcome is likely to shift towards the MNE. Lastly, if the dispute is with a host, rather than a home, government, we argue the MNE is more likely to lose the case because of the liability of foreignness faced by the MNE in the host country. Model Summary OUTCOME = (SIMILARITY OF GOALS + RELATIVE STAKES + RELATIVE RESOURCES + RELATIVE CONSTRAINTS + OTHER FACTORS) SURVEY DESIGN AND DATA The ideal data source for testing our hypotheses would consist of detailed data on multiple individual transfer pricing disputes, including information on all parties, products and markets involved in the dispute, together with environmental factors. However, such datasets are nonexistent and impossible to build. To get around this problem, we decided to survey private sector transfer pricing specialists in North America in 2001-2002. The respondents were asked to answer all questions based on their experience with transfer pricing issues they had dealt with in practice. This second-best approach, while one step removed from surveying the actual parties to the transactions, has several advantages. These individuals work fulltime on transfer pricing issues in accounting, economic consulting, law and private firms, and are deeply familiar with issues concerning the valuation and transfer of intangible assets. In addition, they are likely to be more objective in their responses, and to have analyzed a wider variety of transfer pricing issues than surveying CFOs, controllers or subsidiary managers directly. However, in surveying specialists, we lose a level of detail since we do not know characteristics of the firms or industries. Our mailing list was compiled from the 1999 Tax Analysts' Tax Professional Directory for Transfer Pricing and Advance Pricing Agreements, together with a hand-compiled list of individuals who had published in Tax Management Transfer Pricing Report or Tax Notes International between 1999 and 2001. If an inappropriate individual received the survey, he/she was asked to forward to the appropriate individual(s) within the organization. The survey was pre-tested with the assistance of five transfer pricing experts in the public and private sectors. The first mailing was sent to 684 individuals in August 2001. Since the survey addressed individuals and not companies, companies are often represented more than once. The number listed is reduced by the individuals who checked that the survey was not applicable to their organization or who had moved and were not reachable. After a reminder mailing and a phone call follow-up, 97 transfer pricing specialists responded. Given the high sensitivity of the topic, the 14.18 percent response rate can be considered as favorable. The country breakdown of respondents is US: 78.4 percent, Canada: 15.5 percent, Mexico: 6.2 percent, which is close to the mailing ratios of US: 81.0 percent, Canada: 15.9 percent, Mexico: 3.1 percent. The breakdown by firm type is accounting firms: 44 percent, law firms: 32 percent, MNEs: 18 percent, economic consulting firms: 6 percent. All respondents provided background information on their professional experience in the transfer area. Sixty-five percent have more than 10 years of professional experience in transfer pricing. Two-thirds of the respondents indicate that they spend more than 75 percent of their average work week on international tax issues and 45 percent say that transfer pricing issues absorb 75 percent or more of their workweek. The top three professional qualifications and/or designations obtained by respondents are an LLB or advanced law degree (47 percent), an accounting designation (42 percent), and a taxation specialization (25 percent). Eighty-nine percent of the respondents provide consulting advice on transfer pricing issues; 86 percent prepare and/or review transfer pricing documentation for MNEs; 75 percent provide economic analyses of transfer pricing, 54 percent prepare advance pricing agreements, and 59 percent focus on legal aspects of transfer pricing. As part of the survey, the transfer pricing experts were asked to describe a typical transfer pricing dispute between multinationals and tax authorities that the individual or his/her organization had been involved in over the past five years. The individual was asked to evaluate the goals, resources and constraints of both parties, the outcome, and extenuating circumstances (e.g., whether a second government was involved). A copy of the questions is attached in the Appendix. EMPIRICAL WORK NOT COMPLETED. DISCUSSION AND CONCLUSIONS NOT COMPLETED. ----------------------- REFERENCES Boddewyn, Jean and Thomas Brewer. 1994. International-business political behavior: new theoretical directions. Academy of Management Review 19: 119-44. Brewer, Thomas. 1992. An issue area approach to the analysis of MNE-government relations. Journal of International Business Studies 23:295-309. Dunning, John. 1993. Governments and multinational enterprises: From confrontation to cooperation? In Lorraine Eden and Evan Potter (eds.), Multinationals in the Global Political Economy. London: Macmillan. Eden, Lorraine. 1998. Taxing Multinationals: Transfer Pricing and Corporate Income Taxation in North America. Toronto: University of Toronto Press. Eden, Lorraine, Tina Dacin and William Wan. 2001. Standards Across Borders: Diffusion of the Arm's Length Standard in North America. Accounting, Organizations and Society 26: 1-23. Eden, Lorraine and Stefanie Lenway. 2001. Multinationals: The Janus Face of Globalization. Journal of International Business Studies, 32.3: 383-400. Eden, Lorraine, Stefanie Lenway and Douglas Schuler. Forthcoming. From the Obsolescing Bargain to the Political Bargaining Model. In Robert Grosse (ed.) International Business-Government Relations in the 21st Century. Cambridge, UK: Cambridge University Press. Eden, Lorraine and Maureen Appel Molot. 2002. Insiders, Outsiders and Host Country Bargains. Journal of International Management. Ernst and Young. (1999). Global Transfer Pricing Survey. Washington, DC: Ernst and Young International. Grosse, Robert. 1996. The bargaining relationship between foreign MNEs and host governments in Latin America. The International Trade Journal 10: 467-99. Grosse, Robert and Jack N. Behrman. 1992. Theory in international business. Transnational Corporations 1: 93-126. Jenkins, Barbara. 1986. Re-examining the 'obsolescing bargain': A study of Canada's National Energy Program. International Organization 40: 139-65. Kobrin, Stephen. 1987. Testing the bargaining hypothesis in the manufacturing sector in developing countries. International Organization 41: 609-38. Luo, Yadong. 2001. Toward a cooperative view of MNC-host government relations: Building blocks and performance implications. Journal of International Business Studies 32: 401-19. Moran, Theodore, editor. 1985. Multinational Corporations: The Political Economy of Foreign Direct Investment. Lexington, MA: Lexington Books. Ramamurti, Ravi. 2001. The Obsolescing 'Bargain Model'? MNC-Host developing country relations revisited. Journal of International Business Studies, 32.1: 23-39. Stopford, John M. 1994. The growing interdependence between transnational corporations and governments. Transnational Corporations 3: 53-76. Vachani, Sushil. 1995. Enhancing the obsolescing bargain theory: A longitudinal study of foreign ownership of US and European multinationals. Journal of International Business Studies 26: 159-80. Vernon, Raymond. 1971. Sovereignty at Bay: The Multinational Spread of US Enterprises. New York: Basic Books. Vernon, Raymond. 1977. Storm over the Multinationals: The Real Issues. Cambridge, MA: Harvard University Press. Vernon, Raymond. 1998. In The Hurricane's Eye: The Troubled Prospects of Multinational Enterprises. Cambridge MA: Harvard University Press.

Publication Type: Conference Paper/Unpublished Manuscript
Review Method: Peer Reviewed
Abstract: Drawing of Brian Barry´s important distinction between "power" and "luck" as determinants of bargaining success, we evaluate the predictive accuracy of competing bargaining models. We particularly explore whether purely preference-based models like the Nash Bargaining solution (NBS) predict legislative outcomes less precisely than models that also take various facets of political power into account. Our empirical examination compares 66 legislative proposals of the Commission against each other. The analysis clearly shows that domestic constraints are not a particularly important bargaining resource in the average decision making process. A multi-actor model that draws on the Ståhl-Rubinstein sequential bargaining game performs best among all the models under examination. This demonstrates that patience is an underestimated power resource. Votes are, however, also important in many decision making situations. Although resource-based models provide less accurate forecasts at the average, they offer relatively precise point predictions. We illustrate the importance of different power facets in EU bargaining with a case study on a particularly controversial legislative proposal

Publication Type: Conference Paper/Unpublished Manuscript
Review Method: Peer Reviewed
Abstract: The decision to take the federal option normally results from the prospects of national integration and cohesion that it might offer to a union whose composition has economic, historical, ethnic, cultural, linguistic and religious diversity. The workability of the union is partly anchored in the accommodationist spirits of the constituent parts and partly in the actualisation of the aspirations and needs of the constituent parts. Although Nigeria is not a federation of ethnic groups, the potency of ethnicity in the politics of Nigeria is beyond dispute. In this paper, I want to argue that two opposing strands - dissolutionist ethnic bargaining and consolidationist ethnic bargaining - are discernible in the contemporary politics of Nigeria. Whereas the dissolutionist stance relates to the agitation for the reconstitution or renegotiation of the current Nigerian State, the consolidationist approach insists that the current Nigerian State must remain indivisible. These two stances which are informed by the ethno-regional assessment of the gains or otherwise so far in the Nigerian State can be grasped from the objectives of the numerous ethnic congresses that have proliferated the Nigerian political scene. I would also argue that two versions of the dissolutionist ethnic bargaining exist: the harder version being called for by the separatist agenda of the ethno-political organisations such as the OPC and MASSOB; and lighter version being advocated by ethnic congresses in the Niger Delta that are calling for a reconstitution or renegotiation of Nigeria through the convocation of a Sovereign National Conference (SNC). This paper would be concluded by assessing the future of the Nigerian State in the light of the ethnic militancy that has been introduced to the Nigerian political scene.

Publication Type: Conference Paper/Unpublished Manuscript
Abstract: This article focuses on the use of plea bargaining in reported sexual assault cases, particularly the extent to which sexual assaults are pled down to non-sexual offenses. Official documentation shows that many victims do not report their victimization to the police and few rapists are convicted of their crime. Plea bargaining has become very prevalent in the criminal justice system, with as many as 90% of all crimes using this method of adjudication. Several theoretical perspectives are applied to the use of plea bargaining in sexual assault cases, with a major focus on game theory and courtroom workgroup theory. This project examined sexual assaults reported in a Southwestern, medium-sized metropolitan from January to December 2005; these files were tracked from the police departments that filed the reports through the district attorney’s office that filed the charges. The study assesses the extent of plea bargaining sexual assaults to non-sexual offenses, the most common charge plea bargained down to from sexual assault, and the factors associated with the odds of a successful plea bargain in sexual assault cases.