Intrafirm trade, input–output linkage, and contractual frictions: evidence from Japanese affiliate-level data

This paper revisits how vertical linkages between overseas affiliates and their parents are related to intrafirm trade by shedding light on variations in contractibility across sectors the case of Japanese multinational enterprises based affiliate-level data. We confirm that is observed only a limited fraction affiliates. To include large number with zero into our regressions, we estimate model Poisson Pseudo Maximum Likelihood. find tend export relatively more vertically linked especially if they goods low contractibility. relationship evident for located developing countries. result indicates input–output linkage significant determinant when affected contractual frictions. also robustness results regardless definition indices previous studies.