Vanessa Alviarez

Working Papers

“Two-Sided Market Power In Firm-to-Firm Trade” (with Michele Fioretti, Ayumu Ken Kikkawa, and Monica Morlacco). July 2025. R&R (2nd round) at American Economic Review. [NBER WP 31253] [ProMarket]

This paper develops a theory of bargaining in firm-to-firm trade with two-sided market power. The framework accommodates flexible market structures, yielding analytical expressions for pair-specific markups and pass-through elasticities. In U.S. import data, we estimate strong importer bargaining power and an upward-sloping export supply curve, consistent with oligopsony power. Pass-through of the 2018 tariffs in firm-to-firm relationships is incomplete, in contrast to product-level studies, primarily due to exporter cost reductions driven by falling demand from dominant buyers. Our study highlights how bargaining and network rigidities shape price outcomes, with implications for markup dispersion and shock propagation in global value chains.

“How Shocks Travel: The Cross-Border Impact of Natural Disasters in Firm Networks” (with Brian C. Fujiy, Angel Espinoza, and Tomasz Swiecki). October 2025. R&R at IMF Economic Review.

We study how disruptions in global production networks propagate across borders through firm-to-firm linkages. Using a novel dataset that combines U.S. Bill of Lading microdata, geocoded records of global natural disasters, and cross-border ownership linkages, we trace the effects of exogenous shocks to foreign input suppliers on U.S.-based firms. Our empirical strategy is an event study with staggered exposure, exploiting the exogeneity of natural disasters to estimate causal impacts on trade flows and firm performance. We first document that natural disasters abroad lead to a decline in the exports of affected foreign suppliers from which U.S. firms source intermediate inputs. Building on this first stage, we study how such shocks propagate through global value chains and how the strength of the transmission varies with the nature of the firm-to-firm relationship, particularly the presence of ownership links. This approach allows us to characterize the role of multinational networks and intra-firm linkages in shaping the cross-border transmission of supply chain disruptions.

“Multinationals and Structural Transformation” (with Cheng Chen, Kei-Mu Yi, Nitya Pandalai-Nayar, Liliana Varela, and Hongyong Zhang). Submitted. February 2026. [NBER WP 30494] [IADB Blog Ideas Matter]

We study how multinational corporations (MNCs) shape firm-level and aggregate structural transformation. Using confidential microdata from Japan and exploiting a quasi exogenous reform that expanded foreign investment opportunities in China, we assess empirically how this reform affected employment at firms in both the host country (China) and the home country (Japan). In liberalized industries, Japanese manufacturing affiliates in China expanded employment, while parent firms in Japan shifted out of manufacturing and into higher-value service activities, including R&D. To assess the broader relevance of this mechanism, we use microdata from several advanced and middle-income economies, and show that MNCs account for the majority of the middle-income countries' reallocation to manufacturing.

“Trade Imbalances and the Global Footprint of U.S. Multinationals” (with Laura Alfaro). November 2025.

Why does the U.S. run a persistent trade deficit in goods—and a growing surplus in services—in an era of global production? This paper examines the role of U.S. multinational corporations (MNCs) in shaping these imbalances. Using newly harmonized data covering the global operations of U.S. MNCs over four decades, we document a systematic reallocation of production and service delivery across borders. We show that the expansion of MNC activity is closely linked to the evolution of the U.S. external balance: trade deficits in goods are disproportionately associated with rising foreign production and sourcing by U.S. firms, while surpluses in services grow alongside the outward delivery of digital and intangible-intensive activities. Yet the observed goods deficit is not driven by trade directly conducted by U.S. MNCs—whether through intra-firm transactions or through U.S. parents and affiliates trading with unaffiliated firms. Rather than reflecting the global footprint of U.S. MNCs, the goods trade deficit primarily captures imports by domestic firms with no foreign presence and by the U.S. affiliates of foreign multinationals. Its structure nonetheless mirrors the production networks and sourcing patterns shaped by U.S. firms as they reorganize activity across borders.

“Concentration and Markups in International Trade” (with Michele Fioretti, Ayumu Ken Kikkawa, and Monica Morlacco). July 2025. [SUERF Policy Brief]

This paper derives a closed-form expression linking aggregate markups on imported inputs to concentration in a model of firm-to-firm trade with two-sided market power. Our theory extends standard oligopoly insights in two dimensions. First, it reveals that markups increase with exporter concentration and decrease with importer concentration, reflecting the balance of oligopoly and oligopsony forces. Second, it adapts conventional market definitions to reflect rigid trading relationships, yielding new concentration measures that capture competition in firm-to-firm trade. Analysis of Colombian transaction-level import data shows these differences are key to understanding markup dynamics in international trade.

“Tariff Day: Impact of Recent U.S. Tariff Increases on Latin America and the Caribbean” (with Angel Espinoza). June 2025. [IDB Tariff Tracker]

This paper evaluates the global economic impact of the 2025 U.S. tariff increases under the Trump administration, focusing on Latin America and the Caribbean. Using a quantitative general equilibrium trade model based on Eaton and Kortum (2002) and Caliendo and Parro (2015), we simulate six policy scenarios. The first three capture escalating trade tensions—from unilateral U.S. tariff hikes to retaliatory measures by China and Canada. The final three reflect partial de-escalation paths, including reciprocal tariff reductions, expanded exemptions, and tariff harmonization across North America. We find that LAC was the least affected region. Mexico, exempted from the April 2 measures but subject to Section 232 tariffs, benefits from trade diversion.

Publications

“Global Giants and Local Stars: How Changes in Brand Ownership Affect Competition” (with Keith Head and Thierry Mayer). American Economic Journal: Microeconomics, 17(1), 389-432, 2025. [Working Paper] [IADB Blog Ideas Matter] [IADB Research Insight]

Large beer and spirits makers expanded abroad mainly by acquiring local brands. Exploiting market share data in 76 countries and changes in brand ownership from 2007 to 2018, we estimate that owners matter little for brand performance, except via a negative consumer response to foreign ownership. Our counterfactuals indicate that market power increases were large enough to yield higher profits for the majority of mergers without relying on fixed-cost savings. Emulating pro-competition policies used by the US and EU could have saved South American consumers up to 18%. US beer prices would be 3–4% higher without DOJ-enforced divestitures.

“Firm-Embedded Productivity and Cross-Country Income Differences” (with Natalia Ramondo and Javier Cravino). Journal of Political Economy, 131(9), 2023. [Working Paper] [NBER WP 27915] [Minneapolis FED non-technical summary] [IADB Blog Ideas Matter] [Stone Econ Blog] [IADB Research Insight]

We measure the contribution of firm-embedded productivity to cross-country income differences. By firm-embedded productivity, we refer to the components of productivity that are firm-specific, such as blueprints, management practices, and other intangible capital. Using micro-level data for multinational enterprises (MNEs), we compare market shares of the same MNE in different countries and document that they are systematically larger in less-developed countries. This indicates that MNEs face less competition and that firm-embedded productivity is scarce in these countries. We implement a measure of firm-embedded productivity based on this observation. Differences in firm-embedded productivity account for a third of the cross-country variance in output per worker in our sample.

“Multinational Production and Intra‐Firm Trade” (with Ayhab F. Saad). Review of International Economics, 31(3), 826-853, 2023. [IADB Blog Ideas Matter] [IADB Research Insight]

Intra-firm trade, from parents to affiliates, has been combined with standard models of Multinational production (MP) to deliver gravity-style predictions for foreign affiliates' sales. Nonetheless, the evidence shows that intra-firm trade is concentrated among a small set of large multinational firms. Using firm-level data from 35 countries, we document that only firms belonging to multinational corporations (MNCs) in the upper tail of the firm’s size distribution are significantly affected by the distance to their parents. We present a simple framework featuring MNCs selection into intra-firm trade and derive the analytical gravity equations that are consistent with the empirical findings.

“Multinational Production and Comparative Advantage”. Journal of International Economics, 119, 1-54, 2019. Awarded FREIT-RMET Best Graduate Paper Prize, 2014. [Data and replication files] [Mendeley Data]

This paper shows analytically and quantitatively how omitting the striking sectoral heterogeneity of multinational production (MP) and its relationship with countries’ comparative advantage leads to understating the gains from MP and openness. By construction, one-sector models of trade and MP, ignore the conflicting effects that a reduction in MP frictions has on the sectoral dispersion of MP and trade shares. On the one hand, freer MP increases the dispersion of MP shares across sectors, and with it, the gains from MP. On the other hand, it reduces the heterogeneity of trade shares, since MP erodes sectoral level Ricardian comparative advantage, diminishing, therefore, gains from trade. These effects are driven by the disproportional allocation of MP in industries where local firms are relatively less productive, which generates an uneven productivity boost favoring comparative disadvantage sectors, lowering the differences in observed sectoral productivities. To assess the welfare implications of this mechanism, this paper assembles a novel industry-level dataset of bilateral foreign affiliate sales for 32 countries, 9 tradable sectors, and 4 non-tradable sectors.

“The Growth of Multinational Firms in the Great Recession” (with Javier Cravino and Andrei Levchenko). Journal of Monetary Economics, 85(C), 50-64, 2017.

We use a large firm-level dataset to study the performance of multinational firms across multiple countries during the Great Recession. We document that the foreign affiliates of multinational firms grew faster than local firms both before and after the crisis, but that this rapid growth was interrupted in the crisis. We disentangle the mechanisms accounting for this decline in multinational activity. Much of the slowdown can be explained by industry and size differences between domestic and foreign-owned firms. We show, however, that multinational firms from different source countries had different experiences during the crisis. Building on these results, we use a quantitative model of multinational production to assess the role of multinational firms in the global recession. Had multinationals’ performance relative to domestic firms remained unchanged during the crisis, the median country’s aggregate growth would have been 0.12% higher. The impact is heterogeneous across countries, ranging from -0.13 to 0.5%.

Selected Work in Progress

“Market Boundaries in Buyer-Supplier Networks” (with Michele Fioretti, Ayumu Ken Kikkawa, and Monica Morlacco).

“International versus Domestic Shocks and Pass-Through to Country Prices: A Heterogeneous VAR Approach” (with Peter Pedroni, Andrew Powell, and Ingri Quevedo). [IDB-WP-01649].

“The Employment Effects of Multinational Corporations” (with Kyle Handley, Sui-Jade Ho, and Brian Lucking).

Other Publications

“Foreign Direct Investment and Development”. VoxDevLit CEPR. February 2025. Editors: Stefania Garetto, Nina Pavcnik, and Natalia Ramondo. Co-editors: Vanessa Alviarez, Jingting Fan, Nitya Pandalai-Nayar, Nicola Limodio, Isabela Manelici, Nicolas Morales, Evangelina Dardati, Ezequiel Garcia-Lembergman, Grace Weishi Gu, Galina Hale, David Hémous, Ralf Martin, Farid Farrokhi, Heitor S. Pellegrina, Pierre-Louis Vézina, Laura Boudreau, Jose P. Vasquez

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