DP7530 The Determinants of Intra-Firm Trade

Author(s): Gregory Corcos, Delphine Irac, Giordano Mion, Thierry Verdier
Publication Date: November 2009
Keyword(s): extensive margin, firm heterogeneity, incomplete contracts, intensive margin, internationalization strategies, intra-firm trade, outsourcing, quality of institutions
JEL(s): F12, F19, F23
Programme Areas: International Trade and Regional Economics
Link to this Page: cepr.org/active/publications/discussion_papers/dp.php?dpno=7530

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.