Welfare and Trade Margins with Multinational Production

Pamela Bombarda and Stefania Marcassa

No 2017-14, THEMA Working Papers from THEMA (THéorie Economique, Modélisation et Applications), Université de Cergy-Pontoise

Abstract: We examine how the presence of heterogenous multinational firms matters for the aggregate welfare implications of trade by comparing models with only export, intra-firm activity, and pure multination production. We show that extensive mar- gins depend on both supply and demand parameters, and are not longer constant. We use a theoretical comparative static to isolate the additional component of wel- fare associated with intra- rms trade and to show that models of multinational production have new aggregate welfare implications. The model is then calibrated to analyze counterfactual scenarios. We find that truncation through multinational production is associated with the largest welfare gains from liberalization.

Keywords: MNFs; multinational production; intra-firm trade; welfare. (search for similar items in EconPapers)
JEL-codes: F12 F23 (search for similar items in EconPapers)
Date: 2017
New Economics Papers: this item is included in nep-int
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Persistent link: https://EconPapers.repec.org/RePEc:ema:worpap:2017-14

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