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Outsourcing and Pass-Through

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Author Info

  • Hellerstein, Rebecca
  • Villas-Boas, Sofia B.

Abstract

A large share of international trade occurs through intra-firm transactions. We show that this common cross-border organization of the firm has implications for the well-documented incomplete transmission of shocks across such borders. We present new evidence of an inverse relationship between a firm’s outsourcing of inputs and its rate of exchange-rate pass-through. We then develop a structural econometric model with final assemblers and upstream parts suppliers to quantify how firms’ organization of their activities across national borders affects their pass-through behavior.

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Bibliographic Info

Paper provided by Department of Agricultural & Resource Economics, UC Berkeley in its series Department of Agricultural & Resource Economics, UC Berkeley, Working Paper Series with number qt8098p5nq.

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Date of creation: 01 Feb 2010
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Handle: RePEc:cdl:agrebk:qt8098p5nq

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Related research

Keywords: exchange-rate pass-through; intra-firm trade; vertical contracts; outsourcing; Social and Behavioral Sciences; Business;

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References

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  1. Bonnet, Celine & Dubois, Pierre & Villas-Boas, Sofia B., 2009. "Empirical evidence on the role of non linear wholesale pricing and vertical restraints on cost pass-through," CUDARE Working Paper Series 1089, University of California at Berkeley, Department of Agricultural and Resource Economics and Policy.
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  6. Villas-Boas, Sofia B., 2007. "Vertical relationships between manufacturers and retailers: inference with limited data," Department of Agricultural & Resource Economics, UC Berkeley, Working Paper Series qt6gz1t778, Department of Agricultural & Resource Economics, UC Berkeley.
  7. Neiman, Brent, 2010. "Stickiness, synchronization, and passthrough in intrafirm trade prices," Journal of Monetary Economics, Elsevier, vol. 57(3), pages 295-308, April.
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Citations

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Cited by:
  1. ITO Takatoshi & KOIBUCHI Satoshi & SATO Kiyotaka & SHIMIZU Junko, 2013. "Choice of Invoicing Currency: New evidence from a questionnaire survey of Japanese export firms," Discussion papers 13034, Research Institute of Economy, Trade and Industry (RIETI).
  2. Bonnet, Céline & Dubois, Pierre & Villas Boas, Sofia B., 2009. "Empirical Evidence on the Role of Non Linear Wholesale Pricing and Vertical Restraints on Cost Pass-Through," TSE Working Papers 09-067, Toulouse School of Economics (TSE).
  3. Friberg, Richard & Huse, Cristian, 2012. "How to use demand systems to evaluate risky projects, with an application to automobile production," MPRA Paper 48906, University Library of Munich, Germany.
  4. Gee Hee Hong & Nicholas Li, 2013. "Market Structure and Cost Pass-Through in Retail," Working Papers 13-5, Bank of Canada.
  5. Bonnet, Céline & Réquillart, Vincent, 2013. "Tax incidence with strategic firms in the soft drink market," Journal of Public Economics, Elsevier, vol. 106(C), pages 77-88.
  6. Brent Neiman, 2009. "A State-Dependent Model of Intermediate Goods Pricing," Working Papers 2010-006, Becker Friedman Institute for Research In Economics.
  7. Nicholas Li & Gee Hee Hong, 2013. "Market Structure and Cost Pass-Through in Retail," Working Papers tecipa-470, University of Toronto, Department of Economics.
  8. Adachi, Takanori & Ebina, Takeshi, 2014. "Double marginalization and cost pass-through: Weyl–Fabinger and Cowan meet Spengler and Bresnahan–Reiss," Economics Letters, Elsevier, vol. 122(2), pages 170-175.
  9. Adam Copeland & James A. Kahn, 2012. "Exchange rate pass-through, markups, and inventories," Staff Reports 584, Federal Reserve Bank of New York.

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