Gregory Corcos

Trade Crisis? What Trade Crisis?

We investigate the 20082009 trade collapse using microdata from a small open economy, Belgium. Belgian exports and imports mostly fell because of smaller quantities sold and unit prices charged rather than fewer firms, trading partners, and products being involved in trade. Our difference-in-difference results point to a fall in the demand for tradables as the main driver of the collapse. Finance and involvement in global value chains played a minor role. Firm-level exports-to-turnover and imports-to-intermediates ratios reveal a comparable collapse of domestic and cross-border operations. Overall, our results reject a crisis of cross-border trade per se.

Productivity and Firm Selection: Quantifying the ‘New’ Gains from Trade

We discuss how standard computable equilibrium models of trade policy can be enriched with selection effects. This is achieved by estimating and simulating a partial equilibrium model that accounts for a number of real world effects of trade liberalisation: richer availability of product varieties; tougher competition and weaker market power of firms; better exploitation of economies of scale; and, of course, efficiency gains via firms selection. The model is estimated on EU data and then simulated in counterfactual scenarios. Gains from trade are much larger in the presence of selection effects with substantial variability across countries and sectors.

The Determinants of Intra-Firm Trade

How successful is the theory of the firm in explaining intra-firm trade? To answer this question we exploit a unique dataset of 1,141,393 French import transactions, spanning across firm, countries and products in 1999, and reporting whether a transaction is intra-firm. Overall, we find support for the main predictions of the partial equilibrium property-rights approach and further deliver facts that can be useful for further theoretical development. We document substantial within-industry heterogeneity while providing evidence of the importance of the firm dimension of sourcing choices as well as of the key distinction between the extensive and intensive margins.

The Determinants of Intrafirm Trade: Evidence from French Firms

How well does the theory of the firm explain the choice between intrafirm and arms-length trade? This paper uses firm-level import data from France to look into this question. We find support for three key predictions of property rights theories of the multinational firm. Intrafirm imports are more likely in capital- and skill-intensive firms, in highly productive firms, and from countries with well-functioning judicial institutions. We bridge previous aggregate findings with our investigation by decomposing intrafirm imports into an extensive and intensive margin and uncover interesting patterns in the data that require further theoretical investigation.

Regional Integration, Subsidy Competition and the Relocation Choice of MNCs

Abstract Regional integration makes relocation a more attractive option for Multinational Corporations (MNC), influencing in turn the provision of investment incentives by member countries. We examine in this context the effects of subsidy competition. To do so, we model the strategic interaction between two governments offering subsidies to a MNC facing different location alternatives, which involve relocation and plant closure. Our welfare analysis shows that the combination of regional integration and subsidy competition may lead to suboptimally high levels of subsidization. We also discuss how the desirability of harmonizing subsidies (by banning them), and the net gains from integration crucially depend on technological differences, ownership, and on corporate tax rates. For instance, a simple agreement on avoiding subsidies generally raises welfare if the MNC belongs to an extra-regional country. This is not the case for a regional MNC. Lastly, we find that the gain from regional subsidy coordination increases with integration.