The Margins of Global Sourcing: Theory and Evidence from US Firms

S-Tier
Journal: American Economic Review
Year: 2017
Volume: 107
Issue: 9
Pages: 2514-64

Score contribution per author:

2.681 = (α=2.01 / 3 authors) × 4.0x S-tier

α: calibrated so average coauthorship-adjusted count equals average raw count

Abstract

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.

Technical Details

RePEc Handle
repec:aea:aecrev:v:107:y:2017:i:9:p:2514-64
Journal Field
General
Author Count
3
Added to Database
2026-01-24