Rossini, Giampaolo ;
Vici, Laura
(2007)
Vertical integration, disintegration and ability to export.
Bologna:
Dipartimento di Scienze economiche DSE,
p. 19.
DOI
10.6092/unibo/amsacta/4691.
In: Quaderni - Working Paper DSE
(592).
ISSN 2282-6483.
Full text available as:
Abstract
Recent literature on trade has emphasized the role of
firms’ heterogeneities in export performance and trade specialization
of countries (Melitz, 2003; Melitz and Ottaviano,
2005).
Exporting seems to be a strategy available only to most
efficient and productive firms even in a framework with
transport costs and no reciprocal dumping.
We do not know much about the internal organization
of these smarter companies which are exporting part of
their production. However, from related theoretical (Helpman,
2006) and empirical (Rossini and Ricciardi, 2005)
literature we know that more efficient firms tend to be
more vertically integrated than the average population on
both a domestic and a crossborder basis.
Themain purpose of this paper is to link the two streams
of literature on firms heterogeneities and export, on one
side, and vertical integration and export, on the other side.
Then, we try to answer the question: is the exporting
activity going to affect the degree of vertical integration
making exporting firms more vertically integrated than
non exporting firms? And, if so, why?
We investigate these matters at a theoretical tier and
through a set of econometric tests on firm level data for 25
EU countries. At the theoretical level we consider a model
with two countries each possessing one or two firms: one
in case of vertical integration and two in case of vertical
disintegration. We compare large and small vertically
disintegrated or integrated firms in an environment with
transport costs and home bias. Larger firms tend to be
more vertically integrated and to engage in export activity.
The theoretical conclusions are consistent with the
empirical analysis which says that for larger firms exporting
activity tends to boost the degree of vertical integration.
This provides some link between the two literatures,
the first maintaining that only more productive firms export
and the second stating that more productive firms
are more vertically integrated. The emphasized link dictates
that the more enterprises export the more vertically
integrated they are. Why? It is mostly a matter of size
and R&D commitment which enhances productivity.
Abstract
Recent literature on trade has emphasized the role of
firms’ heterogeneities in export performance and trade specialization
of countries (Melitz, 2003; Melitz and Ottaviano,
2005).
Exporting seems to be a strategy available only to most
efficient and productive firms even in a framework with
transport costs and no reciprocal dumping.
We do not know much about the internal organization
of these smarter companies which are exporting part of
their production. However, from related theoretical (Helpman,
2006) and empirical (Rossini and Ricciardi, 2005)
literature we know that more efficient firms tend to be
more vertically integrated than the average population on
both a domestic and a crossborder basis.
Themain purpose of this paper is to link the two streams
of literature on firms heterogeneities and export, on one
side, and vertical integration and export, on the other side.
Then, we try to answer the question: is the exporting
activity going to affect the degree of vertical integration
making exporting firms more vertically integrated than
non exporting firms? And, if so, why?
We investigate these matters at a theoretical tier and
through a set of econometric tests on firm level data for 25
EU countries. At the theoretical level we consider a model
with two countries each possessing one or two firms: one
in case of vertical integration and two in case of vertical
disintegration. We compare large and small vertically
disintegrated or integrated firms in an environment with
transport costs and home bias. Larger firms tend to be
more vertically integrated and to engage in export activity.
The theoretical conclusions are consistent with the
empirical analysis which says that for larger firms exporting
activity tends to boost the degree of vertical integration.
This provides some link between the two literatures,
the first maintaining that only more productive firms export
and the second stating that more productive firms
are more vertically integrated. The emphasized link dictates
that the more enterprises export the more vertically
integrated they are. Why? It is mostly a matter of size
and R&D commitment which enhances productivity.
Document type
Monograph
(Working Paper)
Creators
Keywords
Vertical Integration, Trade, Export
Ability.
Subjects
ISSN
2282-6483
DOI
Deposit date
26 Feb 2016 11:16
Last modified
26 Feb 2016 11:16
URI
Other metadata
Document type
Monograph
(Working Paper)
Creators
Keywords
Vertical Integration, Trade, Export
Ability.
Subjects
ISSN
2282-6483
DOI
Deposit date
26 Feb 2016 11:16
Last modified
26 Feb 2016 11:16
URI
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