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The Determinants of Intrafirm Trade: Evidence from French Firms

Author

Listed:
  • Grégory Corcos

    (Norwegian School of Economics and Business Administration - Norwegian School of Economics and Business Administration)

  • Delphine Irac

    (Banque de france - Banque de France)

  • Giordano Mion

    (LSE - London School of Economics and Political Science, CEPR - Center for Economic Policy Research)

  • Thierry Verdier

    (CEPR - Center for Economic Policy Research, PSE - Paris-Jourdan Sciences Economiques - ENS-PSL - École normale supérieure - Paris - PSL - Université Paris Sciences et Lettres - INRA - Institut National de la Recherche Agronomique - EHESS - École des hautes études en sciences sociales - ENPC - École nationale des ponts et chaussées - CNRS - Centre National de la Recherche Scientifique, PSE - Paris School of Economics - UP1 - Université Paris 1 Panthéon-Sorbonne - ENS-PSL - École normale supérieure - Paris - PSL - Université Paris Sciences et Lettres - EHESS - École des hautes études en sciences sociales - ENPC - École nationale des ponts et chaussées - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement)

Abstract

How well does the theory of the firm explain the choice between intrafirm and arm's-length trade? This paper uses firm-level import data from France to look into this question. We find support for three key predictions of property rights theories of the multinational firm. Intrafirm imports are more likely in capital- and skill-intensive firms, in highly productive firms, and from countries with well-functioning judicial institutions. We bridge previous aggregate findings with our investigation by decomposing intrafirm imports into an extensive and intensive margin and uncover interesting patterns in the data that require further theoretical investigation.

Suggested Citation

  • Grégory Corcos & Delphine Irac & Giordano Mion & Thierry Verdier, 2013. "The Determinants of Intrafirm Trade: Evidence from French Firms," PSE-Ecole d'économie de Paris (Postprint) halshs-00879809, HAL.
    • Handle: RePEc:hal:pseptp:halshs-00879809
    DOI: 10.1162/REST_a_00293
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    Keywords

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    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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