Production Networks, Geography, and Firm Performance

Andrew Bernard, Andreas Moxnes and Yukiko Saito

Discussion papers from Research Institute of Economy, Trade and Industry (RIETI)

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 firms' marginal production costs. We test the theory by exploiting the opening of a high-speed train line (shinkansen) 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, which are consistent with the model.

Pages: 51 pages
Date: 2016-03
New Economics Papers: this item is included in nep-bec, nep-com, nep-cse, nep-geo, nep-net, nep-sbm and nep-ure
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Citations: View citations in EconPapers (8)

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https://www.rieti.go.jp/jp/publications/dp/16e055.pdf (application/pdf)

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 (2015)
Working Paper: Production Networks, Geography and Firm Performance (2015)
Working Paper: Production Networks, Geography and Firm Performance (2015)
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Persistent link: https://EconPapers.repec.org/RePEc:eti:dpaper:16055

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