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Essays in international trade and organisational economics

Pisch, Frank (2017) Essays in international trade and organisational economics. PhD thesis, London School of Economics and Political Science.

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Identification Number: 10.21953/lse.zlypot3z09br


This thesis contains three chapters that examine various facets of how the market and technological environment shapes firms – and how firms shape their environments. The first chapter studies how multinational manufacturing firms organise production in parallel processing supply chains. Using confidential data on international sourcing of French manufacturing firms and an instrumental variables strategy based on selfconstructed input-output tables, the chapter shows that inputs that account for a high cost share – i.e. that are more important for technological reasons – are more likely to be produced by a multinational for itself, while unimportant ones are outsourced to third parties. It provides additional empirical evidence that this main finding is consistent with a property rights model of the boundary of the firm. The second chapter produces empirical facts on how exogenous changes in tariffs on intermediate goods have affected vertical integration patterns in France over the period 1996-2006 and evaluates them in light of the current literature. Using a long differences approach and detailed information on supply relationships, it shows that more protectionist policies by other countries and by the EU discouraged integrated relationships from shifting towards outsourcing and that initial market structure mattered for the impact of trade policy. The third chapter provides rare causal evidence for the relevance of endowment driven comparative advantage. It uses the fracking boom in the US following 2006 as a source of exogenous variation in the endowment of natural gas – and therefore in energy: fracking made energy considerably cheaper in the US compared to the rest of the world. The chapter studies factor, output, and international trade responses across sectors. It finds that energy intensive sectors expand along all dimensions and, most importantly, export more, which validates one of the most important neo-classical theories of why countries trade with each other.

Item Type: Thesis (PhD)
Additional Information: © 2017 Frank Pisch
Library of Congress subject classification: H Social Sciences > HB Economic Theory
Sets: Departments > Economics
Supervisor: Ottaviano, Gianmarco

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