ABSTRACT

In a previous paper (see Becuwe et al. 1998) we pointed out the conditions under which intra-firm trade occurs when trade barriers exist and production costs are subject to uncertainty. Assuming a monopolistic structure of markets (as done by Horst 1971), we determined the impact of these trade barriers and production costs uncertainty on the intensity of intra-firm trade. In particular, we showed that, in such a context, exports and production abroad may be complementary for a MF, which uses its different production units as a means of limiting the impact of uncertainty on its production costs.