Working Paper: CEPR ID: DP7927
Authors: Andrew B. Bernard; J. Bradford Jensen; Stephen J. Redding; Peter K. Schott
Abstract: This paper examines the determinants of intra-firm trade in U.S. imports using detailed country-product data. We create a new measure of product contractibility based on the degree of intermediation in international trade for the product. We find important roles for the interaction of country and product characteristics in determining intra-firm trade shares. Intra-firm trade is high for products with low levels of contractability sourced from countries with weak governance, for skill-intensive products from skill-scarce countries, and for capital-intensive products from capital-abundant countries.
Keywords: Incomplete Contracts; Intermediation; Related Party Trade
JEL Codes: F10; F23; L14; L23
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| higher revealed product contractibility (L14) | lower shares of intrafirm trade (F12) |
| better governance (H11) | higher probability of related-party trade (L14) |
| better governance (H11) | lower shares of intrafirm trade (F12) |
| lower revealed contractibility + better governance (D73) | lower intrafirm trade shares (F12) |
| better governance (H11) | lower intensity of intrafirm trade (F12) |