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Intra- and inter-firm US trade

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  • Co, Catherine Yap

Abstract

Bivariate Tobit gravity regressions using 2000-2007 US trade data show that US-based firms take advantage of positive forces (e.g., economic freedom) operating in foreign markets more through affiliates than third parties. Likewise, transactions with affiliates are deterred a lot more by negative forces (e.g., distance). Additionally, trade flows are higher (lower) with non-OECD (OECD) countries that are more politically free. Decompositions of the Tobit effects and the predicted-to-actual trade ratios indicate a two-pronged strategy for policymakers: develop targeted policies to specific hurdles to intra-firm trade and work aggressively on increasing market access for US exports.

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Bibliographic Info

Article provided by Elsevier in its journal International Review of Economics & Finance.

Volume (Year): 19 (2010)
Issue (Month): 2 (April)
Pages: 260-277

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Handle: RePEc:eee:reveco:v:19:y:2010:i:2:p:260-277

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Web page: http://www.elsevier.com/locate/inca/620165

Related research

Keywords: Intra-firm trade Arm' s-length trade Multinational firms Gravity equation Institutions;

References

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Citations

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Cited by:
  1. Catherine Co, 2014. "Chinese contractors in developing countries," Review of World Economics (Weltwirtschaftliches Archiv), Springer, vol. 150(1), pages 149-171, February.
  2. Kevin E. Staub, 2014. "A Causal Interpretation of Extensive and Intensive Margin Effects in Generalized Tobit Models," The Review of Economics and Statistics, MIT Press, vol. 96(2), pages 371-375, May.
  3. Lien, Donald & Oh, Chang Hoon & Selmier, W. Travis, 2012. "Confucius institute effects on China's trade and FDI: Isn't it delightful when folks afar study Hanyu?," International Review of Economics & Finance, Elsevier, Elsevier, vol. 21(1), pages 147-155.

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