Vertical Integration, Supplier Behavior, and Quality Upgrading among Exporters

Matthieu Teachout, Christopher Hansman, Jonas Hjort and Gianmarco León-Ciliotta
Authors registered in the RePEc Author Service: Gianmarco León-Ciliotta ()

No 961, Working Papers from Barcelona School of Economics

Abstract: We study the relationship between exporters' organizational structure and output quality. If only input quantity is observable, theory predicts that vertical integration may be necessary to incentivize suppliers to increase input quality. Using data on suppliers' behavior, supplier ownership, supply transactions, and manufacturers' output by quality grade and exports from the Peruvian fishmeal industry, we show the following. After integrating with the plant being supplied and losing access to alternative pay-per-kilo buyers, suppliers take more quality-increasing and less quantity-increasing actions. Integration consequently causally increases output quality, and manufacturers integrate suppliers when facing high relative demand for high quality grades.

Keywords: trade; vertical integration; Peru; quality upgrading (search for similar items in EconPapers)
JEL-codes: D2 O1 (search for similar items in EconPapers)
Date: 2017-03
New Economics Papers: this item is included in nep-cta, nep-ind and nep-int
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (7)

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Related works:
Journal Article: Vertical Integration, Supplier Behavior, and Quality Upgrading among Exporters (2020)
Working Paper: Vertical Integration, Supplier Behavior, and Quality Upgrading among Exporters (2017)
Working Paper: Vertical Integration, Supplier Behavior, and Quality Upgrading among Exporters (2017)
Working Paper: Vertical integration, supplier behavior, and quality upgrading among exporters (2017)
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Persistent link: https://EconPapers.repec.org/RePEc:bge:wpaper:961

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