Brands in Motion: Estimating Multinational Frictions in the Car Industry

Abstract

The speaker uses disaggregated data on car assembly and trade to estimate recent models of multinational production. In addition to the trade costs and multinational production frictions emphasized in past work, he incorporates a third friction: regardless of production origin, demand decreases with greater geographic separation between headquarters and market. The interactions of these three frictions are key determinants of the magnitude and qualitative features of multinational production. He explores different theory-based specifications under which these frictions can be estimated. The results help to explain why offshoring in the industry remains limited and takes a very different form from that seen in consumer electronics.

About the speaker

Prof. Keith Head received his PhD in Economics at the Massachusetts Institute of Technology in 1991. He joined the University of British Columbia after that, and is currently HSBC Professor in Asian Commerce in the Strategy and Business Economics Division at the Sauder School of Business.

Prof. Head's research interests include international trade, multinational enterprises, and economic geography. His recent papers include “The Economics of Cross-border Travel” and “Quality Sorting and Trade: Evidence from French Wine”. His current research investigates the gains from trade and the hidden barriers to globalization.

Prof. Head received awards including the Sauder Research Excellence Prize, the Killam Research Prize and the Killam Teaching Prize.