Shifting the Boundaries,Pricing Down the Chain: Firm-Level Evidence

Kossi Messanh Agbekponou and Iaria Fusacchia

No 293, Departmental Working Papers of Economics - University 'Roma Tre' from Department of Economics - University Roma Tre

Abstract: Global valuechainshavemadefirmboundarydecisionscentraltoperformance,yet their implicationsforexportpricesandshocktransmissionremainpoorlyunderstood. Wedevelopaframeworkinwhichverticalintegrationandproductivityjointlyshape pricing andpass-throughviacostsandmarkupsunderNash-in-Nashbargaining.Inte- gration eliminatesdoublemarginalizationbutintroducesorganizationalcostfrictions, while productivityaffectsbothcostsandorganizationalchoices,generatingacounter- intuitivesortinginwhichlow-productivityfirmsintegrateandhigh-productivityfirms outsource. UsingFrenchcustomsdatamatchedtoAMADEUSbalance-sheetinfor- mation foragri-foodfirms(2002–2017),andaninstrumental-variablestrategybasedon exogenous foreignshocks,wefindthatintegrationreducesexportpricesmainlythrough cumulativemarkupcompression,whileproductivitylowerspricesviacostsbutincreases markups throughsorting.Shocktransmissionisheterogeneous:non-integratedfirms adjust throughmarkups,integratedfirmsthroughcosts,andproductivitydampensboth channels.Pass-throughthusemergesasanequilibriumoutcomeoffirmorganization and productivity.

Keywords: Global Value Chains; Vertical Integration; Bargaining Power; Pass-through; Firm Competitiveness (search for similar items in EconPapers)
JEL-codes: D21 D22 D43 F12 F14 L11 L22 L23 (search for similar items in EconPapers)
Pages: 64
Date: 2026-05
New Economics Papers: this item is included in nep-com and nep-iaf
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