Centre for Vocational Education Research LSE RSS Email Facebook Twitter


CEP discussion paper
Intra-Firm Trade and Product Contractibility (Long Version)
Andrew B. Bernard, J. Bradford Jensen, Stephen J. Redding and Peter K. Schott May 2010
Paper No' CEPDP0978:
Full Paper (pdf)

JEL Classification: F10; F23; L14; L23

Tags: related party trade; imports; contract theory; contractibility; intermedication; human capital; physical capital

This paper examines the determinants of intra-firm trade in U.S. imports using detailed countryproduct data. We create a new measure of product contractibility based on the degree of intermediation in international trade for the product. We 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 contractability sourced from countries with weak governance, for skillintensive products from skill-scarce countries, and for capital-intensive products from capitalabundant countries.