Intrafirm Trade and Vertical Fragmentation in U.S. Multinational Corporations
22 Pages Posted: 18 Aug 2015 Last revised: 23 Sep 2015
Date Written: August 2015
Using firm-level data, we document two new facts regarding intrafirm trade and the activities of the foreign affiliates of U.S. multinational corporations. First, intrafirm trade is concentrated among a small number of large affiliates within large multinational corporations; the median affiliate ships nothing to the rest of the corporation. Second, we find that the input-output coefficient linking the parent’s and affiliate’s industries of operation—a characteristic commonly associated with production fragmentation— is not related to a corresponding intrafirm flow of goods.
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