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Carry-Along Trade

Author

Listed:
  • Andrew B Bernard
  • Emily J Blanchard
  • Ilke Van Beveren
  • Hylke Vandenbussche

Abstract

Large multi-product firms dominate international trade flows. Using novel linked production and export data at the firm-product level, we find that the overwhelming majority of manufacturing firms export products that they do not produce. Three quarters of the exported products and 30% of export value from Belgian manufacturers are in goods that are not produced by the firm, so-called Carry-Along Trade (CAT). The number of CAT products is strongly increasing in firm productivity while the number of produced products that are exported is weakly increasing in firm productivity. We propose a general model of production and sourcing at multi-product firms and explore new demand- and supply-side modelling features capable of generating predictions consistent with the empirical findings. Export price data and company interviews offer suggestive evidence for the presence of demand-scope complementarities.

Suggested Citation

  • Andrew B Bernard & Emily J Blanchard & Ilke Van Beveren & Hylke Vandenbussche, 2019. "Carry-Along Trade," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 86(2), pages 526-563.
    • Handle: RePEc:oup:restud:v:86:y:2019:i:2:p:526-563.
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    File URL: http://hdl.handle.net/10.1093/restud/rdy006
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    More about this item

    Keywords

    Heterogeneous firms; Multi-product firms; Exporting; Sourcing; Productivity; Intermediation; Demand-scope complementarity;
    All these keywords.

    JEL classification:

    • F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies; Fragmentation
    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms

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