Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/81325
Authors: 
Ferguson, Shon
Formai, Sara
Year of Publication: 
2012
Series/Report no.: 
IFN Working Paper 925
Abstract: 
The theory of the firm suggests that firms can respond to poor contract enforcement by vertically integrating their production process. The purpose of this paper is to examine whether firms’ integration opportunities affect the way contract enforcement institutions determine international trade patterns. We find that the benefits of judicial quality for the exports of contract-intense goods are more muted in industries that have a greater propensity towards vertical integration arrangements with input suppliers. We show that our results are not driven by primitive industry characteristics. Our results confirm the role of judicial quality as source of comparative advantage and suggest that this depends not only on the technological characteristics of the goods produced but also on the way firms are able to organize the production process.
Subjects: 
International Trade
Comparative Advantage
Contract Enforcement
Vertical Integration
JEL: 
D23
F10
F14
L22
L23
Document Type: 
Working Paper

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