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Intra-Firm Trade, Multinational Production, and Welfare

Author

Listed:
  • Pamela Bombarda
  • Stefania Marcassa

    (Université de Cergy-Pontoise, THEMA)

Abstract

We propose a model where firms have access to competing market strategies: export and multinational production. Due to technological appropriability issues, foreign affiliates import an intermediate input from the home headquarters. The presence of export and multinational production alters the standard results obtained for welfare in heterogeneous firm models, through a double truncation of the productivity distribution. The model is then calibrated to analyze counterfactual scenarios. We find that welfare gains from intra-firm trade range from 6 to 12 percent depending on country characteristics.

Suggested Citation

  • Pamela Bombarda & Stefania Marcassa, 2017. "Intra-Firm Trade, Multinational Production, and Welfare," THEMA Working Papers 2017-15, THEMA (THéorie Economique, Modélisation et Applications), Université de Cergy-Pontoise.
  • Handle: RePEc:ema:worpap:2017-15
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    References listed on IDEAS

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    More about this item

    Keywords

    MNFs; multinational production; intra-firm trade; welfare.;
    All these keywords.

    JEL classification:

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

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