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Intrafirm carry-along trade

Author

Listed:
  • Masahiro Endoh

    (Faculty of Business and Commerce, Keio University, Japan)

  • Uraku Yoshimoto

    (Faculty of International Social Sciences, Yokohama National University, Japan)

  • Naoto Jinji

    (Graduate School of Economics, Kyoto University, Japan)

  • Keiko Ito

    (Graduate School of Social Sciences, Chiba University, Japan)

Abstract

Carry-along trade (CAT) is the phenomenon in which manufacturing firms export prod-ucts that they have not produced themselves. This study examines the sizes and charac-teristics of CAT in both intrafirm and interfirm trade, using customs and production data from Japanese manufacturing firms from the 2014–2020 period. Depending on how CAT is defined, it may account for between one-third and two-thirds of total exports by Japanese manufacturing firms, underlining the importance of trade intermediation by producers. The ratio of CAT is notably higher in intrafirm trade than in interfirm trade. The distribution of Japanese trade flows indicates that the sizes of CAT components are influenced not only by demand-scope complementarities but also by country-specific economic factors. The high ratio of CAT in intrafirm trade can be attributed to the larger exports of both sourced and produced products by Japanese multinational firms, due to the elimination of bargaining inefficiency between sellers and buyers.

Suggested Citation

  • Masahiro Endoh & Uraku Yoshimoto & Naoto Jinji & Keiko Ito, 2025. "Intrafirm carry-along trade," Discussion papers ron384, Policy Research Institute, Ministry of Finance Japan.
    • Handle: RePEc:mof:wpaper:ron384
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    File URL: https://www.mof.go.jp/pri/research/discussion_paper/ron384.pdf
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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
    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms

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