Discussion Paper Details

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Title: The Determinants of Intra-Firm Trade

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

Publication Date: November 2009

Keyword(s): extensive margin, firm heterogeneity, incomplete contracts, intensive margin, internationalization strategies, intra-firm trade, outsourcing and quality of institutions

Programme Area(s): International Trade and Regional Economics

Abstract: How successful is the theory of the firm in explaining intra-firm trade? To answer this question we exploit a unique dataset of 1,141,393 French import transactions, spanning across firm, countries and products in 1999, and reporting whether a transaction is intra-firm. Overall, we find support for the main predictions of the partial equilibrium property-rights approach and further deliver facts that can be useful for further theoretical development. We document substantial within-industry heterogeneity while providing evidence of the importance of the firm dimension of sourcing choices as well as of the key distinction between the extensive and intensive margins.

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Bibliographic Reference

Corcos, G, Irac, D, Mion, G and Verdier, T. 2009. 'The Determinants of Intra-Firm Trade'. London, Centre for Economic Policy Research.