The Determinants of Intrafirm Trade: Evidence from French Firms
AbstractHow well does the theory of the firm explain the choice between intrafirm and arms' length trade? This paper uses firm-level import data from France to look into this question. We find support for three key predictions of property-rights theories of the multinational firm. Intrafirm imports are more likely: (i) in capital- and skill-intensive firms; (ii) in highly productive firms; (iii) from countries with well-functioning judicial institutions. We further bridge previous aggregate findings with our investigation by decomposing intrafirm imports into an extensive and intensive margin. Doing so we uncover interesting patterns in the data that require further theoretical investigation.
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Bibliographic InfoPaper provided by Centre for Economic Performance, LSE in its series CEP Discussion Papers with number dp1119.
Date of creation: Jan 2012
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Web page: http://cep.lse.ac.uk/_new/publications/series.asp?prog=CEP
intrafirm trade; outsourcing; firm heterogeneity; incomplete contracts; internationalization strategies; quality of institutions; extensive margin; intensive margin;
Other versions of this item:
- Gregory Corcos & Delphine M. Irac & Giordano Mion & Thierry Verdier, 2013. "The Determinants of Intrafirm Trade: Evidence from French Firms," The Review of Economics and Statistics, MIT Press, vol. 95(3), pages 825-838, July.
- Corcos, G. & Irac, D. & Mion, G. & Verdier, T., 2012. "The determinants of intrafirm trade: Evidence from French firms," Working papers 362, Banque de France.
- F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
- F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies; Fragmentation
- F19 - International Economics - - Trade - - - Other
This paper has been announced in the following NEP Reports:
- NEP-ALL-2012-02-08 (All new papers)
- NEP-BEC-2012-02-08 (Business Economics)
- NEP-INT-2012-02-08 (International Trade)
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