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The smile curve at the firm level: Where value is added along supply chains

Armando Rungi () and Davide Del Prete ()

Economics Letters, 2018, vol. 164, issue C, 38-42

Abstract: In this paper, we investigate at the firm-level where value is added along supply chains on a sample of about 2 million firms in the European Union. In line with the hypothesis of a ‘smile curve’, we detect a non-linear U-shaped relationship between the value added content of a firm and its distance from final consumption. Tasks at the early and late stages of the supply chains generate higher value added, possibly due to a higher knowledge-intensity, after controlling for firm heterogeneity. Importantly, our work shows that it is possible to exploit firm-level databases for an empirical microfoundation of value generation, which is useful for understanding the possibly unequal benefits of participating in global value chains.

Keywords: Global value chains; Firm level; Smile curve; Downstreamness; Value added (search for similar items in EconPapers)
JEL-codes: F23 L23 L25 F14 M21 (search for similar items in EconPapers)
Date: 2018
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