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Intra-Firm Trade and Product Contractibility (Long Version)

Author

Listed:
  • Andrew B. Bernard
  • J. Bradford Jensen
  • Stephen Redding
  • Peter K. Schott

Abstract

This paper examines the determinants of intra-firm trade in U.S. imports using detailed countryproduct data. We create a new measure of product contractibility based on the degree of intermediation in international trade for the product. We find important roles for the interaction of country and product characteristics in determining intra-firm trade shares. Intra-firm trade is high for products with low levels of contractability sourced from countries with weak governance, for skillintensive products from skill-scarce countries, and for capital-intensive products from capitalabundant countries.

Suggested Citation

  • Andrew B. Bernard & J. Bradford Jensen & Stephen Redding & Peter K. Schott, 2010. "Intra-Firm Trade and Product Contractibility (Long Version)," CEP Discussion Papers dp0978, Centre for Economic Performance, LSE.
    • Handle: RePEc:cep:cepdps:dp0978
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    Cited by:

    1. Basco, Sergi, 2013. "Financial development and the product cycle," Journal of Economic Behavior & Organization, Elsevier, vol. 94(C), pages 295-313.
    2. Blyde, Juan S. & Volpe Martincus, Christian & Molina, Danielken, 2014. "Fábricas sincronizadas: América Latina y el Caribe en la era de las Cadenas Globales de Valor," IDB Publications (Books), Inter-American Development Bank, number 6668.
    3. Gregory Corcos & Delphine M. Irac & Giordano Mion & Thierry Verdier, 2013. "The Determinants of Intrafirm Trade: Evidence from French Firms," The Review of Economics and Statistics, MIT Press, vol. 95(3), pages 825-838, July.
    4. MUKUNOKI Hiroshi & OKOSHI Hirofumi, 2022. "Antidumping on Tax-induced Dumping," Discussion papers 22063, Research Institute of Economy, Trade and Industry (RIETI).
    5. Blyde, Juan S., 2012. "Contracting Institutions and the Insertion of LAC in International Production Networks," IDB Publications (Working Papers) 4035, Inter-American Development Bank.
    6. Blyde, Juan & Molina, Danielken, 2015. "Logistic infrastructure and the international location of fragmented production," Journal of International Economics, Elsevier, vol. 95(2), pages 319-332.
    7. Carluccio, Juan & Bas, Maria, 2015. "The impact of worker bargaining power on the organization of global firms," Journal of International Economics, Elsevier, vol. 96(1), pages 162-181.
    8. Canuto, Otaviano & Dutz, Mark & Reis, José Guilherme, 2010. "Technological Learning and Innovation: Climbing a Tall Ladder," World Bank - Economic Premise, The World Bank, issue 21, pages 1-8, July.
    9. Díez, Federico J., 2014. "The asymmetric effects of tariffs on intra-firm trade and offshoring decisions," Journal of International Economics, Elsevier, vol. 93(1), pages 76-91.
    10. C. Duprez, 2014. "Creating export value. An analysis of Belgium," Economic Review, National Bank of Belgium, issue ii, pages 23-38, September.
    11. Hayato Kato & Hirofumi Okoshi, 2019. "Production location of multinational firms under transfer pricing: the impact of the arm’s length principle," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 26(4), pages 835-871, August.
    12. Goswami, Arti Grover, 2013. "Vertical FDI versus outsourcing: The role of technology transfer costs," The North American Journal of Economics and Finance, Elsevier, vol. 25(C), pages 1-21.
    13. Zakaria Moussa, 2016. "How big is the comeback? Japanese exchange rate pass-through assessed by Time-Varying FAVAR," Working Papers hal-01282811, HAL.
    14. Antrà s, Pol & Yeaple, Stephen R., 2014. "Multinational Firms and the Structure of International Trade," Handbook of International Economics, in: Gopinath, G. & Helpman, . & Rogoff, K. (ed.), Handbook of International Economics, edition 1, volume 4, chapter 0, pages 55-130, Elsevier.
    15. Del Prete, Davide & Rungi, Armando, 2017. "Organizing the global value chain: A firm-level test," Journal of International Economics, Elsevier, vol. 109(C), pages 16-30.
    16. Araujo, Luis & Mion, Giordano & Ornelas, Emanuel, 2016. "Institutions and export dynamics," Journal of International Economics, Elsevier, vol. 98(C), pages 2-20.
    17. Angels Pelegrín & José García-Quevedo, 2012. "Which firms are involved in foreign vertical integration?," Working Papers 2012/38, Institut d'Economia de Barcelona (IEB).
    18. Juan S. Blyde & Christian Volpe Martincus & Danielken Molina, 2014. "Fábricas sincronizadas: América Latina y el Caribe en la era de las Cadenas Globales de Valor," IDB Publications (Books), Inter-American Development Bank, number 86755 edited by Juan S. Blyde, February.
    19. Aleksandar Zaklan, 2013. "Why Do Emitters Trade Carbon Permits?: Firm-Level Evidence from the European Emission Trading Scheme," Discussion Papers of DIW Berlin 1275, DIW Berlin, German Institute for Economic Research.
    20. Wen-Bin Chuang & Hui-lin Lin & Chien-Wei Wu, 2015. "Does Institutional Quality Strengthen The Positive Influence of Offshore R&D Strategy on the Firm Productivity?," Asian Economic and Financial Review, Asian Economic and Social Society, vol. 5(2), pages 279-294, February.
    21. García-Vega, María & Huergo, Elena, 2017. "Trust and technology transfers," Journal of Economic Behavior & Organization, Elsevier, vol. 142(C), pages 92-104.
    22. Egger, Peter & Seidel, Tobias, 2013. "Corporate taxes and intra-firm trade," European Economic Review, Elsevier, vol. 63(C), pages 225-242.

    More about this item

    Keywords

    Related party trade; imports; contract theory; contractibility; intermedication; human capital; physical capital;
    All these keywords.

    JEL classification:

    • F10 - International Economics - - Trade - - - General
    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
    • L14 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Transactional Relationships; Contracts and Reputation
    • L23 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Organization of Production

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