The asymmetric effects of tariffs on intra-firm trade and offshoring decisions

Federico Diez

Journal of International Economics, 2014, vol. 93, issue 1, 76-91

Abstract: This paper studies the effects of tariffs on intra-firm trade. Building on the Antràs and Helpman (2004) North–South theoretical framework, I show that higher Northern tariffs reduce the incentives for outsourcing and offshoring, while higher Southern tariffs have the opposite effects. I also show that increased offshoring and outsourcing imply a decrease in the ratio of Northern intra-firm imports to total imports, an empirically testable prediction. Using a highly disaggregated dataset of U.S. (the North) imports and relevant U.S. and foreign tariffs, I find robust evidence to support the model's predictions.

Keywords: Intra-firm trade; Offshoring; Outsourcing; Tariffs (search for similar items in EconPapers)
JEL-codes: F10 F23 L22 L23 (search for similar items in EconPapers)
Date: 2014
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (5)

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Working Paper: The asymmetric effects of tariffs on intra-firm trade and offshoring decisions (2010)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:inecon:v:93:y:2014:i:1:p:76-91

DOI: 10.1016/j.jinteco.2013.12.004

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