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Vertical Ownership and Trade: Firm-level evidence from France

  • Gaigne, Carl
  • Latouche, Karine
  • Turolla, Stephane

In this paper, we study the impact of acquiring equity shares in intermediaries on ex- port performance. We develop a trade model with vertically linked industries where the decisions to export and to own its intermediary are endogenous that we test on French data at the firm level. We show that: forward acquisition enables manufacturers to man- age the double marginalization problem and to enjoy lower costs to foreign market access, so that the probability of exporting and export sales are higher for a firm with a par- ticipation in intermediaries. In addition, vertical ownership creates a market externality among manufacturers due to a reallocation of market shares from small firms to large firms forcing some low-productivity firms to exit from foreign markets.

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File URL: http://purl.umn.edu/125020
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Paper provided by Agricultural and Applied Economics Association in its series 2012 Annual Meeting, August 12-14, 2012, Seattle, Washington with number 125020.

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Date of creation: 2012
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Handle: RePEc:ags:aaea12:125020
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  1. Aakvik, Arild, 2001. " Bounding a Matching Estimator: The Case of a Norwegian Training Program," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 63(1), pages 115-43, February.
  2. Emmanuelle Chevassus-Lozza & Karine Latouche, 2012. "Firms, markets and trade costs: access of French exporters to European agri-food markets," European Review of Agricultural Economics, Foundation for the European Review of Agricultural Economics, vol. 39(2), pages 257-288, April.
  3. Felbermayr, Gabriel & Jung, Benjamin, 2011. "Trade intermediation and the organization of exporters," Munich Reprints in Economics 20574, University of Munich, Department of Economics.
  4. Pol Antràs & Arnaud Costinot, 2011. "Intermediated Trade," The Quarterly Journal of Economics, Oxford University Press, vol. 126(3), pages 1319-1374.
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  6. Dehejia, Rajeev, 2005. "Practical propensity score matching: a reply to Smith and Todd," Journal of Econometrics, Elsevier, vol. 125(1-2), pages 355-364.
  7. Costas Arkolakis & Svetlana Demidova & Peter J. Klenow & Andrés Rodríguez-Clare, 2008. "Endogenous Variety and the Gains from Trade," NBER Working Papers 13933, National Bureau of Economic Research, Inc.
  8. Ali Hortacsu & Chad Syverson, 2009. "Why Do Firms Own Production Chains?," Working Papers 09-31, Center for Economic Studies, U.S. Census Bureau.
  9. Akerman, Anders, 2010. "A Theory on the Role of Wholesalers in International Trade based on Economies of Scope," Research Papers in Economics 2010:1, Stockholm University, Department of Economics.
  10. Baltagi, Badi H. & Egger, Peter & Pfaffermayr, Michael, 2007. "Estimating models of complex FDI: Are there third-country effects?," Journal of Econometrics, Elsevier, vol. 140(1), pages 260-281, September.
  11. Smith, Jeffrey & Todd, Petra, 2005. "Rejoinder," Journal of Econometrics, Elsevier, vol. 125(1-2), pages 365-375.
  12. Alan C. Spearot, 2012. "Firm Heterogeneity, New Investment and Acquisitions," Journal of Industrial Economics, Wiley Blackwell, vol. 60(1), pages 1-45, 03.
  13. Alexander Hijzen & Holger G�rg & Miriam Manchin, 2006. "Cross-border mergers and acquisitions and the role of trade costs," European Economy - Economic Papers 242, Directorate General Economic and Financial Affairs (DG ECFIN), European Commission.
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