Production Networks, Geography, and Firm Performance

Andrew Bernard, Andreas Moxnes and Yukiko Saito

Journal of Political Economy, 2019, vol. 127, issue 2, 639 - 688

Abstract: This paper examines the importance of buyer-supplier relationships for firm performance. We develop a model in which firms outsource tasks and search for suppliers. Lower search and outsourcing costs lead firms to search more and find better suppliers, which in turn drives down marginal costs. We test the theory by exploiting the opening of a high-speed train line in Japan, which lowered the cost of passenger travel but left shipping costs unchanged. Using an exhaustive data set on firms’ buyer-seller linkages, we find significant improvements in firm performance as well as creation of buyer-seller links, consistent with the model.

Date: 2019
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Citations: View citations in EconPapers (194)

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Related works:
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 (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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