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

  • Díez, Federico J.
Registered author(s):

    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
    DOI: 10.1016/j.jinteco.2013.12.004
    Contact details of provider: Web page: http://www.elsevier.com/locate/inca/505552

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    1. Andrew B. Bernard & J. Bradford Jensen & Stephen Redding & Peter K. Schott, 2010. "Intrafirm trade and product contractibility," LSE Research Online Documents on Economics 28616, London School of Economics and Political Science, LSE Library.
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    3. Antràs, Pol & Staiger, Robert, 2008. "Offshoring and the Role of Trade Agreements," CEPR Discussion Papers 6966, C.E.P.R. Discussion Papers.
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    11. Antrà s, Pol & Yeaple, Stephen R., 2014. "Multinational Firms and the Structure of International Trade," Handbook of International Economics, Elsevier.
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    20. Stephen Ross Yeaple, 2006. "Offshoring, Foreign Direct Investment, and the Structure of U.S. Trade," Journal of the European Economic Association, MIT Press, vol. 4(2-3), pages 602-611, 04-05.
    21. Eric J. Bartelsman & Wayne Gray, 1996. "The NBER Manufacturing Productivity Database," NBER Technical Working Papers 0205, National Bureau of Economic Research, Inc.
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