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Intra- and inter-firm US trade

  • Co, Catherine Yap

Bivariate Tobit gravity regressions using 2000-2007 US trade data show that US-based firms take advantage of positive forces (e.g., economic freedom) operating in foreign markets more through affiliates than third parties. Likewise, transactions with affiliates are deterred a lot more by negative forces (e.g., distance). Additionally, trade flows are higher (lower) with non-OECD (OECD) countries that are more politically free. Decompositions of the Tobit effects and the predicted-to-actual trade ratios indicate a two-pronged strategy for policymakers: develop targeted policies to specific hurdles to intra-firm trade and work aggressively on increasing market access for US exports.

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Article provided by Elsevier in its journal International Review of Economics & Finance.

Volume (Year): 19 (2010)
Issue (Month): 2 (April)
Pages: 260-277

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Handle: RePEc:eee:reveco:v:19:y:2010:i:2:p:260-277
Contact details of provider: Web page: http://www.elsevier.com/locate/inca/620165

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