Spillovers through Supply Chains: How large plant openings affect local supplier firms

Takafumi Kawakubo and Takafumi Suzuki

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

Abstract: This study examines how becoming a supplier to a newly established large-scale plant influences the performance of incumbent small plants. Exploiting detailed plant-level data, records of new large-plant openings, and supply chain information, we construct a quasi-experimental setting based on the spatial distribution of new entrants. Our event-study estimates show that while local supplier plants benefit significantly—both statistically and economically—from large-scale plants, non-supplier plants in the same region face negative impacts, likely due to intensified competition spurred by the newly-contracted suppliers. The results underscore that such entries create “winners and losers†not only across different regions but also within the same locality. From a policy perspective, these insights highlight the importance of facilitating effective partnerships between large-scale entrants and local suppliers, as well as offering support to disadvantaged non-supplier firms. Overall, our findings illuminate the nuanced local economic consequences of large-scale plant entries and offer guidance for future industrial and regional policies.

Pages: 35 pages
Date: 2025-09
New Economics Papers: this item is included in nep-com, nep-sbm and nep-sea
References: Add references at CitEc
Citations:

Downloads: (external link)
https://www.rieti.go.jp/jp/publications/dp/25e083.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eti:dpaper:25083

Access Statistics for this paper

More papers in Discussion papers from Research Institute of Economy, Trade and Industry (RIETI) Contact information at EDIRC.
Bibliographic data for series maintained by TANIMOTO, Toko ().