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Felix Tintelnot
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Journal Articles
Publisher: Journals Gateway
The Review of Economics and Statistics 1–48.
Published: 30 April 2024
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Multinational firms (MNEs) dominate trade flows, yet their foreign production decisions are often ignored in firm-level studies of exporting and importing. Using newly merged data on US firms' trade and global production, we show that MNEs are more likely to trade with countries that are proximate to their affiliates. We rationalize these patterns with a new source of firm-level scale economies that arises when fixed costs to source from, or sell in, a market are shared across the MNE's plants. These shared fixed costs create interdependencies between firms' production and trade locations that generate third-market responses to trade policy changes.
Includes: Supplementary data
Journal Articles
Publisher: Journals Gateway
The Review of Economics and Statistics (2015) 97 (3): 623–637.
Published: 01 July 2015
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Using a microlevel data set of wind turbine installations in Denmark and Germany, we estimate a structural oligopoly model with cross-border trade and heterogeneous firms. Our approach separately identifies border-related from distance-related variable costs and bounds the fixed cost of exporting for each firm. In the data, firms’ market shares drop precipitously at the border. We find that 40% to 50% of the gap can be attributed to national border costs. Counterfactual analysis indicates that eliminating national border frictions would increase total welfare in the wind turbine industry by 4% in Denmark and 6% in Germany.
Includes: Supplementary data