Department of Economics and Business Economics

CATs and DOGs

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There is recent firm level evidence that manufacturing firms export products that they do not produce themselves. Bernard et al., 2019 call this “Carry-Along Trade” (CAT) and show that it is a widespread phenomenon among Belgian manufacturing exports. In this paper, we study why manufacturing firms may decide to have their products carried-along instead of exporting their products themselves. We show that if the “Delivery of Own Goods” (DOG) is an alternative option, the profitability of CAT is determined by demand linkages, productivity and transportation costs. Our focus is on the strategic aspects of CAT, and we illustrate that CAT can produce the same outcome as product-specific, market-specific collusion.

Original languageEnglish
Article number103338
JournalJournal of International Economics
Volume126
ISSN0022-1996
DOIs
Publication statusPublished - Sep 2020

    Research areas

  • Carry along trade, Collusion, Mode of exporting, Multi-product firms

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