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Trade Within Multinational Boundaries

Author

Listed:
  • Laura Alfaro
  • Paola Conconi
  • Fariha Kamal
  • Zachary Kroff

Abstract

Traditional theories of firm boundaries predict trade between vertically related units of the same firm. Using novel data that combine a comprehensive mapping of U.S. multinationals’ production networks with their customs filings, we uncover a strong positive relationship between input-output linkages and trade between parents and their affiliates. We also find that intrafirm trade is prevalent, particularly between geographically proximate units: three-quarters of affiliates in North America trade with their U.S. parent. These results overturn prior findings based on survey data on intrafirm trade. Administrative intrafirm records enable correcting measurement errors in survey data, reconciling traditional theories with empirical evidence.

Suggested Citation

  • Laura Alfaro & Paola Conconi & Fariha Kamal & Zachary Kroff, 2026. "Trade Within Multinational Boundaries," CESifo Working Paper Series 12394, CESifo.
    • Handle: RePEc:ces:ceswps:_12394
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    References listed on IDEAS

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    Keywords

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    JEL classification:

    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
    • D23 - Microeconomics - - Production and Organizations - - - Organizational Behavior; Transaction Costs; Property Rights
    • L20 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - General

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