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Intra-Firm Trade, Multinational Production, and Welfare

Listed author(s):
  • Pamela Bombarda
  • Stefania Marcassa

    ()

    (Université de Cergy-Pontoise, THEMA)

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.

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Paper provided by THEMA (THéorie Economique, Modélisation et Applications), Université de Cergy-Pontoise in its series THEMA Working Papers with number 2017-15.

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Date of creation: 2017
Handle: RePEc:ema:worpap:2017-15
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