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Structure du commerce intra-firme, intégration des marchés et harmonisation fiscale

Author

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  • Pierre Blanchard
  • Carl Gaigné
  • Claude Mathieu

Abstract

This paper proposes a theoretical analysis of the structure of trade within multinational firms. A two country model is developed in which a multinational firm incurs different profit tax rates between the two countries in which its affiliates are located, and trade-related costs. We determine the conditions under which the multinational firm engages in vertical and/or horizontal intra-firm trade. We show that intra-firm vertical and horizontal occurs when the tax rate on profits is lower or higher abroad. Such a configuration holds if the production costs of the final product is higher in the foreign country and trade barriers are relatively high. We then show that a fall in tariff and non tariff barriers reduces the volume of trade in intermediate goods while it raises trade in final product. Finally, tax harmonization between countries has an ambiguous effect on the volume of intra-firm. Classification JEL : F23, F11

Suggested Citation

  • Pierre Blanchard & Carl Gaigné & Claude Mathieu, 2010. "Structure du commerce intra-firme, intégration des marchés et harmonisation fiscale," Revue économique, Presses de Sciences-Po, vol. 61(5), pages 895-915.
  • Handle: RePEc:cai:recosp:reco_615_0895
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    More about this item

    JEL classification:

    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
    • F11 - International Economics - - Trade - - - Neoclassical Models of Trade

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