Research

Technology, Licensing and Multinational Production  (JMP)

[Best Young Economist Award of the RoWE 2025] [Distinguished CESifo Affiliate Award 2026]

Abstract: How flexible are multinational production networks when assembly technologies are specialized and costly to reconfigure? Using detailed data on the global automotive industry from 2000-2023, I document that modern manufacturing organized by modular production is facilitated through discrete process technologies (platforms) that constrain where each product can be assembled. Exploiting the 2011 Tohoku earthquake as a quasi-natural experiment, I show that platform compatibility constrains firms' ability to reallocate production after local shocks.  Firms overcome this constraint by sharing technologies via licensing. I then develop and estimate a structural model of multinational production (MP) endogenizing the discrete technology choices and inter-firm licensing. Both technology constraints and licensing have important effects on firms' expected costs and profits, shaping the global allocation of production and consumer surplus. These new margins alter our understanding of conventional trade policy. Traditional frameworks abstracting from production technologies overstate the reallocation induced by tariff increases and correspondingly understate the price incidence borne by the tariffing country's consumers. In contrast to other MP frameworks, the model also allows to study novel policies targeting the access to technologies. Such restrictions can produce larger reallocation compared to a broad tariff war. Their incidence is more concentrated on the specific firms and locations bound by the affected technologies, compared to tariffs which distribute costs more broadly across every producer at a tariffed origin.

The U.S.-China Trade War and the Geography of Global Production, with Harald Fadinger, Lei Li & Jan Schymik

[CEPR Discussion Paper No. 21855, VoxEU column]

Abstract:  We study how the U.S.-China trade war affected manufacturing activity in third countries using a novel plant-level dataset covering millions of establishments in 50 major economies, including affiliates of more than 200,000 multinational enterprises (MNEs). Combining establishment-level data with detailed tariff information, we estimate the effects of U.S. and Chinese punitive bilateral output and input tariffs on sales, employment, and establishments across countries, industries, and stages of production. We find that third-country effects of the trade war are highly heterogeneous and largely offsetting, yielding moderately negative net effects overall. Most of the adjustment is driven by multinational enterprises reallocating activity across affiliate networks, while domestic firms respond much less.

Flooded with Uncertainty: Data and Design Pitfalls in Measuring the Granular Impact of Natural Disasters, with Thierry Mayer and Michele Fioretti (draft upon request)

Abstract:  Extreme weather events pose a growing risk to global production. The growing body of literature on the impacts of natural disasters, such as floods, on households, firms, and economic development largely relies on event study designs exploiting publicly available climate data. This paper documents the challenges and pitfalls associated with this approach using a commonly used database of floods. To do so, we study the responses and adaptations to flood exposure of firms in the automotive industry. We show that, in our setting, (i) floods are often missing or spatially / temporarily misallocated in the data; (ii) canonical Difference-in-Differences methods are sensitive to the design and lead to qualitatively different conclusions. We explore the mechanisms behind this dispersion and provide guidance on how to apply the methods to these datasets to deliver credible results.

Heterogeneous Regulations Harmonization in Global Production, with Monika Mrázová & Céline Carrère 

Abstract: While trade agreements typically focus on the reduction of tariffs, production and consumption standards constitute equally important barriers to international exchange. We study the efficiency and welfare gains from harmonizing country-specific regulation in industries dominated by multi-product multinational firms, using detailed data on the global auto industry. Two opposing forces shape the equilibrium: firms have an incentive to relocate emission-intensive products to countries with laxer regulation, but once the fixed costs of compliant production have been incurred it can be cheaper to sell the same compliant products in laxer markets as well, thereby exporting strict standards de facto. We quantify the net effect of these two channels and the welfare consequences of partial and full harmonization in the context of vehicle emission regulation.