EconPapers    
Economics at your fingertips  
 

Buyer Investment, Product Variety, and Intrafirm Trade

Robert Feenstra () and Yongmin Chen ()

No 11752, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: This paper studies a simple model of buyer investment and its effect on the variety and vertical structure of international trade. A distinction is made between two types of buyer investment: "flexible" and "specific." Their interactions with the entry and pricing incentives of suppliers are analyzed. It is shown that (i) there can be multiple equilibria in the variety of products traded, and (ii) less product variety is associated with more intrafirm trade. The possibility of multiple equilibria is consistent with the observation that some similar economies, such as Taiwan and South Korea, differ substantially in their export varieties to the U.S. A formal empirical analysis confirms the negative correlation between product variety and intrafirm trade.

JEL-codes: F1 (search for similar items in EconPapers)
Date: 2005-11
New Economics Papers: this item is included in nep-bec, nep-com and nep-int
Note: ITI
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1) Track citations by RSS feed

Published as Chen, Yongmin & Feenstra, Robert C., 2008. "Buyer investment, export variety, and intrafirm trade," European Economic Review, Elsevier, vol. 52(8), pages 1313-1337, November.

Downloads: (external link)
http://www.nber.org/papers/w11752.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:nbr:nberwo:11752

Ordering information: This working paper can be ordered from
http://www.nber.org/papers/w11752

Access Statistics for this paper

More papers in NBER Working Papers from National Bureau of Economic Research, Inc National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.. Contact information at EDIRC.
Bibliographic data for series maintained by ().

 
Page updated 2020-05-20
Handle: RePEc:nbr:nberwo:11752