Carry-Along Trade | Zendy

Andrew B. Bernard | Zendy; Emily J. Blanchard | Zendy; Ilke Van Beveren | Zendy; Hylke Vandenbussche | Zendy

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Carry-Along Trade

Author(s) -

Andrew B. Bernard,

Emily J. Blanchard,

Ilke Van Beveren,

Hylke Vandenbussche

Publication year - 2018

Publication title -

the review of economic studies

Language(s) - English

Resource type - Journals

SCImago Journal Rank - 15.641

H-Index - 141

eISSN - 1467-937X

pISSN - 0034-6527

DOI - 10.1093/restud/rdy006

Subject(s) - carry (investment) , productivity , product (mathematics) , production (economics) , industrial organization , scope (computer science) , economics , value (mathematics) , economies of scope , business , commerce , international trade , microeconomics , macroeconomics , geometry , mathematics , machine learning , computer science , economies of scale , programming language

Large multi-product firms dominate international trade flows. Using novel linked production and export data at the firm-product level, we find that the overwhelming majority of manufacturing firms export products that they do not produce. Three quarters of the exported products and 30% of export value from Belgian manufacturers are in goods that are not produced by the firm, so-called Carry-Along Trade (CAT). The number of CAT products is strongly increasing in firm productivity while the number of produced products that are exported is weakly increasing in firm productivity. We propose a general model of production and sourcing at multi-product firms and explore new demand- and supply-side modelling features capable of generating predictions consistent with the empirical findings. Export price data and company interviews offer suggestive evidence for the presence of demand-scope complementarities.

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