Intra-Firm Trade And Product Contractibility

Date Added: May 2010
Format: PDF

This paper examines the determinants of intra-firm trade in US imports using detailed country-product data. The authors create a new measure of product contractibility based on the degree of intermediation in international trade for the product. They find important roles for the interaction of country and product characteristics in determining intra-firm trade shares. Intra-firm trade is high for products with low levels of contractibility sourced from countries with weak governance, for skill-intensive products from skill-scarce countries, and for capital-intensive products from capital-abundant countries.