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CATs and DOGs

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  • Eckel, Carsten
  • Riezman, Raymond

Abstract

There is recent firm level evidence that manufacturing firms export products that they do not produce themselves. Bernard et al., 2019 call this “Carry-Along Trade” (CAT) and show that it is a widespread phenomenon among Belgian manufacturing exports. In this paper, we study why manufacturing firms may decide to have their products carried-along instead of exporting their products themselves. We show that if the “Delivery of Own Goods” (DOG) is an alternative option, the profitability of CAT is determined by demand linkages, productivity and transportation costs. Our focus is on the strategic aspects of CAT, and we illustrate that CAT can produce the same outcome as product-specific, market-specific collusion.

Suggested Citation

  • Eckel, Carsten & Riezman, Raymond, 2020. "CATs and DOGs," Journal of International Economics, Elsevier, vol. 126(C).
    • Handle: RePEc:eee:inecon:v:126:y:2020:i:c:s0022199620300544
    DOI: 10.1016/j.jinteco.2020.103338
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    References listed on IDEAS

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    1. Arnarson, Björn Thor, 2020. "The superstar and the followers: Intra-firm product complementarity in international trade," Journal of Economic Behavior & Organization, Elsevier, vol. 177(C), pages 277-304.
    2. Swati Dhingra, 2013. "Trading Away Wide Brands for Cheap Brands," American Economic Review, American Economic Association, vol. 103(6), pages 2554-2584, October.
    3. Eckel, Carsten & Riezman, Raymond, 2020. "CATs and DOGs," Journal of International Economics, Elsevier, vol. 126(C).
    4. Sharat Ganapati, 2018. "The Modern Wholesaler: Global Sourcing, Domestic Distribution, and Scale Economies," Working Papers 18-49, Center for Economic Studies, U.S. Census Bureau.
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    Cited by:

    1. Ariu, Andrea & Mayneris, Florian & Parenti, Mathieu, 2020. "One way to the top: How services boost the demand for goods," Journal of International Economics, Elsevier, vol. 123(C).
    2. Erbahar, Aksel & Rebeyrol, Vincent, 2023. "Trade intermediation by producers," Journal of International Economics, Elsevier, vol. 140(C).
    3. Eckel, Carsten & Riezman, Raymond, 2020. "CATs and DOGs," Journal of International Economics, Elsevier, vol. 126(C).

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    More about this item

    Keywords

    Carry along trade; Multi-product firms; Mode of exporting; Collusion;
    All these keywords.

    JEL classification:

    • F1 - International Economics - - Trade
    • L1 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance
    • L2 - Industrial Organization - - Firm Objectives, Organization, and Behavior

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