Working Paper: NBER ID: w15881
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: Intrafirm trade; Product contractibility; Governance quality; Multinational firms
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 |
|---|---|
| low contractibility products + weak governance (L33) | high intrafirm trade (F12) |
| skill-scarce countries + skill-intensive products (F66) | high intrafirm trade (F12) |
| capital-abundant countries + capital-intensive products (F20) | high intrafirm trade (F12) |
| improvements in country governance (O17) | reductions in intrafirm trade for low contractibility products (F12) |