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Carry-Along Trade

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Author Info

  • Bernard, Andrew B.
  • Blanchard, Emily
  • van Beveren, Ilke
  • Vandenbussche, Hylke

Abstract

Large multi-product firms dominate international trade flows. This paper documents new facts about multi-product manufacturing exporters that are not easily reconciled with existing multi-product models. Using novel linked production and export data at the firm-product level, we find that the overwhelming majority of manufacturing firms export products that they do not produce. Three quarters of the exported products and thirty percent of export value from Belgian manufacturers are in goods that are not produced by the firm, so-called Carry-Along Trade (CAT). The number of CAT products is strongly increasing in firm productivity while the number of produced products that are exported is weakly increasing in firm productivity. We propose a general model of production and sourcing at multi-product firms. While the baseline model fails to reconcile the relationships between firm productivity and the numbers of exported products observed in the data, several demand and supply-side extensions to the model are more successful. Looking at export price data, we find support for a novel theoretical extension based on demand-scope complementarities.

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Bibliographic Info

Paper provided by C.E.P.R. Discussion Papers in its series CEPR Discussion Papers with number 9067.

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Date of creation: Jul 2012
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Handle: RePEc:cpr:ceprdp:9067

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Related research

Keywords: demand-scope complementarity; exporting; heterogeneous firms; intermediation; multi-product firms; productivity; sourcing;

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References

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  1. Thierry Mayer & Marc J. Melitz & Gianmarco I. P. Ottaviano, 2012. "Market size, competition, and the product mix of exporters," LSE Research Online Documents on Economics 54286, London School of Economics and Political Science, LSE Library.
  2. Bernard, Andrew B. & Grazzi, Marco & Tomasi, Chiara, 2012. "Intermediaries in International Trade: Direct versus indirect modes of export," CEPR Discussion Papers 8766, C.E.P.R. Discussion Papers.
  3. Monika Mrázová & J. Peter Neary, 2012. "Selection Effects with Heterogeneous Firms," CEP Discussion Papers dp1174, Centre for Economic Performance, LSE.
  4. Costas Arkolakis & Marc-Andreas Muendler, 2010. "The Extensive Margin of Exporting Products: A Firm-level Analysis," CESifo Working Paper Series 3309, CESifo Group Munich.
  5. Eckel, Carsten & Iacovone, Leonardo & Javorcik, Beata & Neary, J Peter, 2011. "Multi-Product Firms at Home and Away: Cost- versus Quality-based Competence," CEPR Discussion Papers 8186, C.E.P.R. Discussion Papers.
  6. Carsten Eckel & J. Peter Neary, 2010. "Multi-Product Firms and Flexible Manufacturing in the Global Economy," Review of Economic Studies, Oxford University Press, vol. 77(1), pages 188-217.
  7. Dimitra Petropoulou, 2011. "Information costs, networks and intermediation in international trade," Globalization and Monetary Policy Institute Working Paper 76, Federal Reserve Bank of Dallas.
  8. Ali Hortacsu & Chad Syverson, 2009. "Why Do Firms Own Production Chains?," Working Papers 09-31, Center for Economic Studies, U.S. Census Bureau.
  9. Leonardo Iacovone & BeataS. Javorcik, 2010. "Multi-Product Exporters: Product Churning, Uncertainty and Export Discoveries," Economic Journal, Royal Economic Society, vol. 120(544), pages 481-499, 05.
  10. 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.
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Citations

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Cited by:
  1. João Amador & Luca David Opromolla, 2008. "Product and Destination Mix in Export Markets," Working Papers w200817, Banco de Portugal, Economics and Research Department.
  2. Colantone, Italo & Crinò, Rosario, 2014. "New imported inputs, new domestic products," Journal of International Economics, Elsevier, vol. 92(1), pages 147-165.
  3. Mary Amiti & Oleg Itskhoki & Jozef Konings, 2012. "Importers, exporters, and exchange rate disconnect," Working Paper Research 238, National Bank of Belgium.
  4. Michele Imbruno, 2014. "Trade Liberalization, Intermediate Inputs and Firm Efficiency: Direct versus Indirect Modes of Import," Discussion Papers 2014-02, University of Nottingham, GEP.
  5. Alessia LO TURCO & Daniela MAGGIONI, 2013. "Dissecting the impact of innovation on exporting in Turkey," Working Papers 388, Universita' Politecnica delle Marche (I), Dipartimento di Scienze Economiche e Sociali.
  6. Alessia LO TURCO & Daniela MAGGIONI, 2012. "Imports, exports and the firm product scope: evidence from Turkey," Working Papers 384, Universita' Politecnica delle Marche (I), Dipartimento di Scienze Economiche e Sociali.
  7. Jože Damijan & Jozef Konings & Sašo Polanec, 2013. "Pass-on trade: why do firms simultaneously engage in two-way trade in the same varieties?," Review of World Economics (Weltwirtschaftliches Archiv), Springer, vol. 149(1), pages 85-111, March.
  8. Svetlana Batrakova, 2012. "Does industry concentration matter for pollution haven effects?," Grantham Research Institute on Climate Change and the Environment Working Papers 90, Grantham Research Institute on Climate Change and the Environment.

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