Brands in Motion: How frictions shape multinational production

Head, Keith; Mayer, Thierry

Brands in Motion: How frictions shape multinational production

Abstract: We use disaggregated data on car assembly and trade to estimate a model of multinational production. Our framework delineates four theory-based specifications under which all frictions relevant to multinational production can be structurally estimated. In addition to the trade costs and multinational production frictions emphasized in past work, we incorporate a third friction: regardless of production origin, it is more difficult to make sales in markets that are geographically separated from the brand s headquarters. The estimation transparently recovers internally consistent estimates of each type of friction cost. With structural parameters in hand, we investigate the consequences of three trade integration experiments: TPP, TTIP, and Brexit. We show that each type of friction makes a qualitative and quantitative difference in the reallocation of production caused by economic integration.

Keywords: cars; gravity; multinational production model; regional integration; structural estimation. (search for similar items in EconPapers)
JEL-codes: F1 (search for similar items in EconPapers)
Pages: 41 pages
Date: 2017
New Economics Papers: this item is included in nep-int
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (6)

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Persistent link: https://EconPapers.repec.org/RePEc:bfr:banfra:629

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