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

  • Díez, Federico J.
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    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 a decrease in the ratio of Northern intra-firm imports to total imports, an empirically testable prediction. Using a highly disaggregated dataset of U.S. (the North) imports and relevant U.S. and foreign tariffs, I find robust evidence to support the model's predictions.

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    File URL: http://www.sciencedirect.com/science/article/pii/S0022199613001335
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    Article provided by Elsevier in its journal Journal of International Economics.

    Volume (Year): 93 (2014)
    Issue (Month): 1 ()
    Pages: 76-91

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    Handle: RePEc:eee:inecon:v:93:y:2014:i:1:p:76-91
    Contact details of provider: Web page: http://www.elsevier.com/locate/inca/505552

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