Intra- and inter-firm US trade

Catherine Co

International Review of Economics & Finance, 2010, vol. 19, issue 2, 260-277

Abstract: Bivariate Tobit gravity regressions using 2000-2007 US trade data show that US-based firms take advantage of positive forces (e.g., economic freedom) operating in foreign markets more through affiliates than third parties. Likewise, transactions with affiliates are deterred a lot more by negative forces (e.g., distance). Additionally, trade flows are higher (lower) with non-OECD (OECD) countries that are more politically free. Decompositions of the Tobit effects and the predicted-to-actual trade ratios indicate a two-pronged strategy for policymakers: develop targeted policies to specific hurdles to intra-firm trade and work aggressively on increasing market access for US exports.

Keywords: Intra-firm; trade; Arm'; s-length; trade; Multinational; firms; Gravity; equation; Institutions (search for similar items in EconPapers)
Date: 2010
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Citations: View citations in EconPapers (5)

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