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Global Firms

Andrew Bernard (), J. Jensen (), Stephen Redding and Peter K. Schott

CEP Discussion Papers from Centre for Economic Performance, LSE

Abstract: Research in international trade has changed dramatically over the last twenty years, as attention has shifted from countries and industries towards the firms actually engaged in international trade. The now-standard heterogeneous firm model posits a continuum of firms that compete under monopolistic competition (and hence are measure zero) and decide whether to export to foreign markets. However, much of international trade is dominated by a few "global firms," which participate in the international economy along multiple margins and are large relative to the markets in which they operate. We outline a framework that allows firms to be of positive measure and to decide simultaneously on the set of production locations, export markets, input sources, products to export, and inputs to import. We use this framework to interpret features of U.S. firm and trade transactions data and highlight interdependencies across these margins of firm international participation. Global firms participate more intensively along each margin, magnifying the impact of underlying differences in firm characteristics, and explaining their dominance of aggregate international trade.

Keywords: firm heterogeneity; international trade; multinationals; multi-product firms (search for similar items in EconPapers)
JEL-codes: L11 L21 L25 L60 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-bec, nep-cse, nep-int and nep-pke
Date: 2016-04
References: View references in EconPapers View complete reference list from CitEc
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Journal Article: Global Firms (2018) Downloads
Working Paper: Global Firms (2016) Downloads
Working Paper: Global firms (2016) Downloads
Working Paper: Global Firms (2016) Downloads
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