Intra-Firm Trade, Multinational Production, and Welfare

Pamela Bombarda and Stefania Marcassa

No 2017-15, THEMA Working Papers from THEMA (THéorie Economique, Modélisation et Applications), Université de Cergy-Pontoise

Abstract: We propose a model where firms have access to competing market strategies: export and multinational production. Due to technological appropriability issues, foreign affiliates import an intermediate input from the home headquarters. The presence of export and multinational production alters the standard results obtained for welfare in heterogeneous firm models, through a double truncation of the productivity distribution. The model is then calibrated to analyze counterfactual scenarios. We find that welfare gains from intra-firm trade range from 6 to 12 percent depending on country characteristics.

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-bec, nep-cse and nep-int
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Persistent link: https://EconPapers.repec.org/RePEc:ema:worpap:2017-15

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