The Margins of Global Sourcing: Theory and Evidence from U.S. Firms

49 Pages Posted: 22 Dec 2014

See all articles by Pol Antras

Pol Antras

Harvard University - Department of Economics; National Bureau of Economic Research (NBER)

Teresa Fort

Dartmouth College - Tuck School of Business

Felix Tintelnot

University of Chicago Department of Economics

Multiple version iconThere are 4 versions of this paper

Date Written: December 2014

Abstract

We develop a quantifiable multi-country sourcing model in which firms self-select into importing based on their productivity and country-specific variables. In contrast to canonical export models where firm profits are additively separable across destination markets, global sourcing decisions naturally interact through the firm's cost function. We show that, under an empirically relevant condition, selection into importing exhibits complementarities across source markets. We exploit these complementarities to solve the firm's problem and estimate the model. Comparing counterfactual predictions to reduced-form evidence highlights the importance of interdependencies in firms' sourcing decisions across markets, which generate heterogeneous domestic sourcing responses to trade shocks.

Suggested Citation

Antras, Pol and Fort, Teresa C. and Tintelnot, Felix, The Margins of Global Sourcing: Theory and Evidence from U.S. Firms (December 2014). NBER Working Paper No. w20772. Available at SSRN: https://ssrn.com/abstract=2541548

Pol Antras (Contact Author)

Harvard University - Department of Economics ( email )

Littauer Center
Room 230
Cambridge, MA 02138
United States
617-495-1236 (Phone)
617-495-8570 (Fax)

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Teresa C. Fort

Dartmouth College - Tuck School of Business ( email )

Hanover, NH 03755
United States

Felix Tintelnot

University of Chicago Department of Economics ( email )

1101 East 58th Street
Chicago, IL 60637
United States

Here is the Coronavirus
related research on SSRN

Paper statistics

Downloads
19
Abstract Views
901
PlumX Metrics