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The Determinants of Intra-Firm Trade

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  • Verdier, Thierry
  • Mion, Giordano
  • Irac, Delphine
  • Corcos, Gregory

Abstract

How successful is the theory of the firm in explaining intra-firm trade? To answer this question we exploit a unique dataset of 1,141,393 French import transactions, spanning across firm, countries and products in 1999, and reporting whether a transaction is intra-firm. Overall, we find support for the main predictions of the partial equilibrium property-rights approach and further deliver facts that can be useful for further theoretical development. We document substantial within-industry heterogeneity while providing evidence of the importance of the firm dimension of sourcing choices as well as of the key distinction between the extensive and intensive margins.

Suggested Citation

  • Verdier, Thierry & Mion, Giordano & Irac, Delphine & Corcos, Gregory, 2009. "The Determinants of Intra-Firm Trade," CEPR Discussion Papers 7530, C.E.P.R. Discussion Papers.
    • Handle: RePEc:cpr:ceprdp:7530
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    More about this item

    Keywords

    Extensive margin; Firm heterogeneity; Incomplete contracts; Intensive margin; Internationalization strategies; Intra-firm trade; Outsourcing; Quality of institutions;
    All these keywords.

    JEL classification:

    • F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies; Fragmentation
    • F19 - International Economics - - Trade - - - Other
    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business

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