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The Determinants of Intrafirm Trade: Evidence from French Firms

Gregory Corcos, Delphine Irac (), Giordano Mion () and Thierry Verdier ()

CEP Discussion Papers from Centre for Economic Performance, LSE

Abstract: How well does the theory of the firm explain the choice between intrafirm and arms' length trade? This paper uses firm-level import data from France to look into this question. We find support for three key predictions of property-rights theories of the multinational firm. Intrafirm imports are more likely: (i) in capital- and skill-intensive firms; (ii) in highly productive firms; (iii) from countries with well-functioning judicial institutions. We further bridge previous aggregate findings with our investigation by decomposing intrafirm imports into an extensive and intensive margin. Doing so we uncover interesting patterns in the data that require further theoretical investigation.

Keywords: intrafirm trade; outsourcing; firm heterogeneity; incomplete contracts; internationalization strategies; quality of institutions; extensive margin; intensive margin (search for similar items in EconPapers)
JEL-codes: F23 F12 F19 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-bec and nep-int
Date: 2012-01
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Related works:
Journal Article: The Determinants of Intrafirm Trade: Evidence from French Firms (2013) Downloads
Working Paper: The determinants of intrafirm trade: evidence from French firms (2013) Downloads
Working Paper: The determinants of intrafirm trade: Evidence from French firms (2012) Downloads
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