Working Paper: CEPR ID: DP7530
Authors: Gregory Corcos; Delphine M. Irac; Giordano Mion; Thierry Verdier
Abstract: How successful is the theory of the firm in explaining intra-firm trade? To answer this question we exploit a unique dataset of 1,141,393 French import transactions, spanning across firm, countries and products in 1999, and reporting whether a transaction is intra-firm. Overall, we find support for the main predictions of the partial equilibrium property-rights approach and further deliver facts that can be useful for further theoretical development. We document substantial within-industry heterogeneity while providing evidence of the importance of the firm dimension of sourcing choices as well as of the key distinction between the extensive and intensive margins.
Keywords: extensive margin; firm heterogeneity; incomplete contracts; intensive margin; internationalization strategies; intrafirm trade; outsourcing; quality of institutions
JEL Codes: F12; F19; F23
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Firm productivity (D21) | Likelihood of engaging in intrafirm trade (F12) |
| Strong judicial institutions (O17) | Likelihood of engaging in intrafirm trade (F12) |
| Product complexity (L15) | Likelihood of being produced within firm boundaries (D22) |