Gains from Intra-Firm Trade and Multinational Production

This paper quantifes the welfare gains from intra-form trade. We propose a model where rms have access to competing market strategies: export and multinational production. Due to technolog- ical appropriability issues, foreign affiliates import an intermediate input from the home headquarters. The presence of export and multinational production alters the standard results obtained for welfare in heterogeneous form models, through a double truncation of the productivity distribution. The model is then calibrated to analyze counterfactual scenarios. We and that welfare gains from intra-form trade range from 0.3 to 7 percent depending on country characteristics.