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The Determinants of Intra-Firm Trade

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

No 267, Development Working Papers from Centro Studi Luca d'Agliano, University of Milano

Abstract: This paper analyzes the determinants of the intra-firm vs arms’length sourcing mode of imported inputs. We build a unique French dataset of 1,141,393 import transactions at the firm, country and product levels in the year 1999 that allow us to distinguish the different sourcing modes. We study the firms-, country- and product- determinants of intra-firm trade. We confirm a number of theory-based predictions building on the residuals property rights approach and provide some empirical facts that can be used to further refine this as well as alternative theories. In particular, we highlight the fact that firms’ heterogeneity needs to be evaluated across different dimensions. Furthermore, we point out that complex goods are more likely to be produced within the firm boundaries suggesting that those material and immaterial attributes that characterized a product play a key role in globalized sourcing strategies.

Keywords: Internationalization strategies; intra-firm trade; outsourcing; firm heterogeneity (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-int
Date: 2008-11-30
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Working Paper: The Determinants of Intra-Firm Trade (2009) Downloads
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