Heterogeneity of Goods and Methods of International Trade: Wholesale, Intra-Firm, or Arms-Length

Abstract

We look for evidence that heterogeneity of goods influences how the goods are traded internationally, whether via an intermediary in the form of a wholesaler, within the firm via intra firm trade, or at arms-length between firms. Making use of a unique data set of U.S. industries we find that trade among wholesalers is associated with homogenous goods, whereas intra-firm trade is associated with heterogeneous goods. These results are robust with respect to several different estimation methods.

Keywords: Intermediaries, trade, wholesalers, contractibility, product heterogeneity

JEL Classification: F1, F14