The gradual evolution of buyer-seller networks and their role in aggregate fluctuations

Ryohei Hisano, Tsutomu Watanabe, Takayuki Mizuno, Takaaki Ohnishi and Didier Sornette
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Ryohei Hisano: Social ICT Research Center, Graduate School of Information Science and Technology, The University of Tokyo
Tsutomu Watanabe: Graduate School of Economics, The University of Tokyo
Takayuki Mizuno: Information and Society Research Division, National Institute of Informatics
Takaaki Ohnishi: Social ICT Research Center, Graduate School of Information Science and Technology, The University of Tokyo
Didier Sornette: Department of Management, Technology and Economics, ETH Zurich, Swiss Federal Institute of Technology

No 68, UTokyo Price Project Working Paper Series from University of Tokyo, Graduate School of Economics

Abstract: Buyer-seller relationships among firms can be regarded as a longi- tudinal network in which the connectivity pattern evolves as each firm receives productivity shocks. Based on a data set describing the evolu- tion of buyer-seller links among 55,608 firms over a decade and structural equation modeling, we find some evidence that interfirm networks evolve reflecting a firm's local decisions to mitigate adverse effects from neigh- bor firms through interfirm linkage, while enjoying positive effects from them. As a result, link renewal tends to have a positive impact on the growth rates of firms. We also investigate the role of networks in aggregate fluctuations.

Pages: 18 pages
Date: 2016-08
New Economics Papers: this item is included in nep-bec, nep-net and nep-ure
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