Production Networks, Geography and Firm Performance

Andrew Bernard, Andreas Moxnes and Yukiko Saito

No 10551, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: This paper examines the importance of buyer-supplier relationships, geography and the structure of the production network in firm performance. We develop a simple model where firms can outsource tasks and search for suppliers in different locations. Low search and outsourcing costs lead firms to search more and find better suppliers. This in turn drives down the firm's marginal production costs. We test the theory by exploiting the opening of a high-speed (Shinkansen) train line in Japan which lowered the cost of passenger travel but left shipping costs unchanged. Using an exhaustive dataset on firms' buyer-seller linkages, we find significant improvements in firm performance as well as creation of new buyer-seller links, consistent with the model.

Keywords: Firm-to-firm neworks; Infrastructure; Productivity; Trade (search for similar items in EconPapers)
JEL-codes: D22 D85 F14 L10 L14 R12 (search for similar items in EconPapers)
Date: 2015-04
New Economics Papers: this item is included in nep-bec, nep-eff, nep-geo, nep-sbm and nep-ure
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Citations: View citations in EconPapers (44)

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Related works:
Journal Article: Production Networks, Geography, and Firm Performance (2019)
Working Paper: Production networks, geography and firm performance (2016)
Working Paper: Production networks, geography and firm performance (2016)
Working Paper: Production Networks, Geography, and Firm Performance (2016)
Working Paper: Production Networks, Geography and Firm Performance (2015)
Working Paper: Production Networks, Geography and Firm Performance (2015)
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