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Vertical Ownership and Trade: Firm-level evidence from France

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  • Gaigne, Carl
  • Latouche, Karine
  • Turolla, Stephane

Abstract

In this paper, we study the impact of acquiring equity shares in intermediaries on ex- port performance. We develop a trade model with vertically linked industries where the decisions to export and to own its intermediary are endogenous that we test on French data at the firm level. We show that: forward acquisition enables manufacturers to man- age the double marginalization problem and to enjoy lower costs to foreign market access, so that the probability of exporting and export sales are higher for a firm with a par- ticipation in intermediaries. In addition, vertical ownership creates a market externality among manufacturers due to a reallocation of market shares from small firms to large firms forcing some low-productivity firms to exit from foreign markets.

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Bibliographic Info

Paper provided by Agricultural and Applied Economics Association in its series 2012 Annual Meeting, August 12-14, 2012, Seattle, Washington with number 125020.

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Date of creation: 2012
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Handle: RePEc:ags:aaea12:125020

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Keywords: Exports; Forward integration; Heterogeneous firms; Intermediary; International Relations/Trade; F12; L22;

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  1. Aakvik, A., 2001. "Bounding a Matching Estimator: The Case of a Norwegian Training Program," Norway; Department of Economics, University of Bergen 222, Department of Economics, University of Bergen.
  2. Gabriel J Felbermayr & Benjamin Jung, 2009. "Trade Intermediation and the Organization of Exporters," Diskussionspapiere aus dem Institut für Volkswirtschaftslehre der Universität Hohenheim 309/2009, Department of Economics, University of Hohenheim, Germany.
  3. Hijzen, Alexander & Görg, Holger & Manchin, Miriam, 2008. "Cross-border mergers and acquisitions and the role of trade costs," European Economic Review, Elsevier, vol. 52(5), pages 849-866, July.
  4. Enghin Atalay & Ali Hortacsu & Chad Syverson, 2012. "Why Do Firms Own Production Chains?," NBER Working Papers 18020, National Bureau of Economic Research, Inc.
  5. Akerman, Anders, 2010. "A Theory on the Role of Wholesalers in International Trade based on Economies of Scope," Research Papers in Economics 2010:1, Stockholm University, Department of Economics.
  6. Antràs, Pol & Costinot, Arnaud, 2010. "Intermediated Trade," CEPR Discussion Papers 7696, C.E.P.R. Discussion Papers.
  7. Sascha O. Becker & Marco Caliendo, 2007. "Sensitivity analysis for average treatment effects," Stata Journal, StataCorp LP, vol. 7(1), pages 71-83, February.
  8. Costas Arkolakis & Svetlana Demidova & Peter J. Klenow & Andrés Rodríguez-Clare, 2008. "Endogenous Variety and the Gains from Trade," NBER Working Papers 13933, National Bureau of Economic Research, Inc.
  9. Smith, Jeffrey & Todd, Petra, 2005. "Rejoinder," Journal of Econometrics, Elsevier, vol. 125(1-2), pages 365-375.
  10. Emmanuelle Chevassus-Lozza & Karine Latouche, 2012. "Firms, markets and trade costs: access of French exporters to European agri-food markets," Working Papers 45308, Institut National de la Recherche Agronomique, France.
  11. Alan C. Spearot, 2012. "Firm Heterogeneity, New Investment and Acquisitions," Journal of Industrial Economics, Wiley Blackwell, vol. 60(1), pages 1-45, 03.
  12. Baltagi, Badi H. & Egger, Peter & Pfaffermayr, Michael, 2007. "Estimating models of complex FDI: Are there third-country effects?," Journal of Econometrics, Elsevier, vol. 140(1), pages 260-281, September.
  13. Dehejia, Rajeev, 2005. "Practical propensity score matching: a reply to Smith and Todd," Journal of Econometrics, Elsevier, vol. 125(1-2), pages 355-364.
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