Internalizing Global Value Chains: A Firm-Level Analysis

Laura Alfaro, Pol Antràs, Davin Chor, and Paola Conconi
DOI number

#Trade and FDI

A key decision facing firms is the extent of control to exert over the different stages in their production processes. We develop and test a property rights model of firm boundary choices along the value chain. We construct firm-level measures of the upstreamness of integrated and nonintegrated inputs by combining information on firms’ production activities in more than 100 countries with input-output tables. Whether a firm integrates upstream or downstream suppliers depends crucially on the elasticity of demand it faces. Moreover, integration is shaped by the relative contractibility of stages along the value chain, as well as by the firm’s productivity.


Pol Antràs

Harvard University

Davin Chor

Tuck School of Business at Dartmouth College

Scroll to Top