Pass-on Trade: Why do Firms Simultaneously Engage in Two-Way Trade in the Same Varieties?
AbstractThis paper documents that a large fraction of trade flows at the firm level consists of simultaneous imports and exports in identical products, narrowly defined at the 8-digit product classification, which we call Pass-On Trade, POT. We use data on imports and exports at the firm–product level for Slovenian manufacturing firms in the period 1994-2008, to show that, on average, 70 percent of all exporting firms engage in POT. This corresponds to more than 50 percent of all exported products. Thus, imported products that are exported again by the same firm is a statistical regularity of trade of Slovenian manufacturing firms. We document that the use of POT is increasing in firm size, product diversification, multinational status as well as firm productivity and profitability. We offer and explore empirically a number of explanations for POT. Among possible explanations, we find evidence on the importance of firms’ multinational networks and demand complementarities between firms’ own and POT products. The latter confirms the theoretical explanations for ‘Carry-Along Trade’ (CAT) as developed by the recent work of Bernard et al (2010, 2012).
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Bibliographic InfoPaper provided by Katholieke Universiteit Leuven, Faculteit Economie en Bedrijfswetenschappen, Vives in its series Vives discussion paper series with number 31.
Date of creation: 2012
Date of revision:
Other versions of this item:
- 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.
- Jože P. Damijan & Jozef Konings & Sašo Polanec, 2012. "Pass-on Trade: Why do Firms Simultaneously engage in Two-Way Trade in the Same Varieties?," LICOS Discussion Papers 31212, LICOS - Centre for Institutions and Economic Performance, KU Leuven.
- Damijan, J.P. & Konings, Joep & Polanec, S., 2012. "Pass-on trade: why do firms simultaneously engage in two-way trade in the same varieties?," Open Access publications from Katholieke Universiteit Leuven urn:hdl:123456789/403752, Katholieke Universiteit Leuven.
- R10 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - General
- R15 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Econometric and Input-Output Models; Other Methods
This paper has been announced in the following NEP Reports:
- NEP-ALL-2012-09-16 (All new papers)
- NEP-BEC-2012-09-16 (Business Economics)
- NEP-INT-2012-09-16 (International Trade)
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- Jože P. Damijan & Jozef Konings & Sašo Polanec, 2012.
"Import Churning and Export Performance of Multi-Product Firms,"
LICOS Discussion Papers
30712, LICOS - Centre for Institutions and Economic Performance, KU Leuven.
- Damijan, Joze & Konings, Joep & Polanec, Saso, 2012. "Import churning and export performance of multi-product firms," Open Access publications from Katholieke Universiteit Leuven urn:hdl:123456789/349304, Katholieke Universiteit Leuven.
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