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The asymmetric effects of tariffs on intra-firm trade and offshoring decisions

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  • Federico J. Díez
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    Abstract

    This paper studies the effects of tariffs on intra-firm trade. Building on the Antràs and Helpman (2004) North-South theoretical framework, I show that higher Northern tariffs reduce the incentives for outsourcing and offshoring, while higher Southern tariffs have the opposite effects. I also show that increased offshoring and outsourcing imply an increase in the ratio of Northern intra-firm imports to total imports, which is an empirically testable prediction. Using a highly disaggregated dataset of U.S. (the North) imports and relevant tariffs, I find robust evidence to support the model's predictions.

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    Bibliographic Info

    Paper provided by Federal Reserve Bank of Boston in its series Working Papers with number 10-4.

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    Date of creation: 2010
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    Handle: RePEc:fip:fedbwp:10-4

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    Related research

    Keywords: Tariff ; Contracting out ; Trade;

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