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Advances In Logistics And The Growth Of Intra‐Firm Trade: The Case Of Canadian Affiliates Of U.S. Multinationals, 1984–1995

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  • MICHAEL P. KEANE
  • SUSAN E. FEINBERG

Abstract

Intra‐firm trade in intermediates between U.S. multinational parents (MNCs) and their Canadian manufacturing affiliates increased dramatically in the 1984–1995 period (i.e., it roughly doubled). Tariff and transport cost declines were far too small to explain this phenomenon. But we show that the advent of improved logistics management practices, including the ‘just‐in‐time’ (JIT) production system, can explain much of the growth of intra‐firm trade. JIT lowers the inventory carrying cost component of intra‐firm trade, and, by 1984, this was more important than tariff and transport costs in many industries. We combine regression analysis with numerous case studies to draw our conclusions.

Suggested Citation

  • Michael P. Keane & Susan E. Feinberg, 2007. "Advances In Logistics And The Growth Of Intra‐Firm Trade: The Case Of Canadian Affiliates Of U.S. Multinationals, 1984–1995," Journal of Industrial Economics, Wiley Blackwell, vol. 55(4), pages 571-632, December.
    • Handle: RePEc:bla:jindec:v:55:y:2007:i:4:p:571-632
    DOI: 10.1111/j.1467-6451.2007.00323.x
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    References listed on IDEAS

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    3. Maloney, William F. & Sarrias, Mauricio, 2017. "Convergence to the managerial frontier," Journal of Economic Behavior & Organization, Elsevier, vol. 134(C), pages 284-306.
    4. Cajal-Grossi, Julia & Del Prete, Davide & Macchiavello, Rocco, 2023. "Supply chain disruptions and sourcing strategies," International Journal of Industrial Organization, Elsevier, vol. 90(C).
    5. Susan E. Feinberg & Michael P. Keane, 2009. "Tariff effects on MNC decisions to engage in intra-firm and arm's-length trade," Canadian Journal of Economics, Canadian Economics Association, vol. 42(3), pages 900-929, August.
    6. Kazunobu Hayakawa & Kiyoyasu Tanaka & Yasushi Ueki, 2013. "Transport Modal Choice by Multinational Firms: Firm-level Evidence from Southeast Asia," International Economic Journal, Taylor & Francis Journals, vol. 27(4), pages 609-623, December.
    7. Chen Shen, 2023. "The Impact of Infrastructure Development on China–ASEAN Trade-Evidence from ASEAN," Sustainability, MDPI, vol. 15(4), pages 1-11, February.

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