The Margins of Global Sourcing: Theory and Evidence from U.S. Firms / Pol Antràs, Teresa C. Fort, Felix Tintelnot.

Format:

Book

Author/Creator:

Antràs, Pol.

Contributor:

National Bureau of Economic Research.

Fort, Teresa C.

Tintelnot, Felix.

Series:

Working Paper Series (National Bureau of Economic Research) no. w20772.

NBER working paper series no. w20772

Language:

English

Physical Description:

1 online resource: illustrations (black and white);

Other Title:

Margins of Global Sourcing

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 2014.

Summary:

We develop a quantifiable multi-country sourcing model in which firms self-select into importing based on their productivity and country-specific variables. In contrast to canonical export models where firm profits are additively separable across destination markets, global sourcing decisions naturally interact through the firm's cost function. We show that, under an empirically relevant condition, selection into importing exhibits complementarities across source markets. We exploit these complementarities to solve the firm's problem and estimate the model. Comparing counterfactual predictions to reduced-form evidence highlights the importance of interdependencies in firms' sourcing decisions across markets, which generate heterogeneous domestic sourcing responses to trade shocks.

Notes:

Print version record

December 2014.