The Determinants of Intra-Firm Trade

36 Pages Posted: 21 May 2009

See all articles by Gregory Corcos

Gregory Corcos

Norwegian School of Economics (NHH) - Department of Economics

Delphine M. Irac

Columbia University - Graduate School of Arts and Sciences, Department of Economics

Giordano Mion

University of Sussex - Department of Economics; London School of Economics & Political Science (LSE) - Centre for Economic Performance (CEP); Centre for Economic Policy Research (CEPR); CESifo (Center for Economic Studies and Ifo Institute)

Thierry Verdier

Paris School of Economics (PSE); Delta - Ecole Normale Superieure (ENS); Centre for Economic Policy Research (CEPR)

Multiple version iconThere are 2 versions of this paper

Date Written: November 1, 2008

Abstract

This paper analyzes the determinants of the intra-firm vs arms' length sourcing mode of imported inputs. We build a unique French dataset of 1,141,393 import transactions at the firm, country and product levels in the year 1999 that allow us to distinguish the different sourcing modes. We study the firms-, country- and product-determinants of intra-firm trade. We confirm a number of theory-based predictions building on the residuals property rights approach and provide some empirical facts that can be used to further refine this as well as alternative theories. In particular, we highlight the fact that firms' heterogeneity needs to be evaluated across different dimensions. Furthermore, we point out that complex goods are more likely to be produced within the firm boundaries suggesting that those material and immaterial attributes that characterized a product play a key role in globalized sourcing strategies.

Keywords: internationalization strategies, intra-firm trade, outsourcing, firm heterogeneity

JEL Classification: F23, F12, F19

Suggested Citation

Corcos, Gregory and Irac, Delphine M. and Mion, Giordano and Verdier, Thierry, The Determinants of Intra-Firm Trade (November 1, 2008). Centro Studi Luca d'Agliano Development Studies Working Paper No. 267. Available at SSRN: https://ssrn.com/abstract=1408182 or http://dx.doi.org/10.2139/ssrn.1408182

Gregory Corcos

Norwegian School of Economics (NHH) - Department of Economics ( email )

Helleveien 30
N-5035 Bergen
Norway

Delphine M. Irac

Columbia University - Graduate School of Arts and Sciences, Department of Economics ( email )

420 W. 118th Street
New York, NY 10027
United States

Giordano Mion (Contact Author)

University of Sussex - Department of Economics ( email )

Falmer, Brighton BN1 9SL
United Kingdom

HOME PAGE: http://sites.google.com/site/giordanomionhp/

London School of Economics & Political Science (LSE) - Centre for Economic Performance (CEP) ( email )

Houghton Street
London WC2A 2AE
United Kingdom

Centre for Economic Policy Research (CEPR) ( email )

London
United Kingdom

CESifo (Center for Economic Studies and Ifo Institute) ( email )

Poschinger Str. 5
Munich, DE-81679
Germany

Thierry Verdier

Paris School of Economics (PSE) ( email )

48 Boulevard Jourdan
Paris, 75014
France

Delta - Ecole Normale Superieure (ENS) ( email )

48, Boulevard Jourdan
75014 Paris
France
+33 1 4313 6308 (Phone)
+33 1 4313 6310 (Fax)

Centre for Economic Policy Research (CEPR)

London
United Kingdom

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