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Supplier Search and Re-Matching in Global Sourcing: Theory and Evidence from China

Fabrice Defever (), Christian Fischer and Jens Suedekum ()

CEP Discussion Papers from Centre for Economic Performance, LSE

Abstract: In this paper, we consider a dynamic search-and-matching problem of a firm with its intermediate input supplier. In our model, a headquarter currently matched with a supplier, has an interest to find and collaborate with a more efficient partner. However, supplier switching through search and re-matching is costly. Given this trade-off between the fixed costs and the expected gains from continued search, the process will stop whenever the headquarter has found a sufficiently efficient supplier. Using firm-product-level data of fresh Chinese exporters to the United States, we obtain empirical evidence in line with the predictions of our theory. In particular, we find that the share of short-term collaborations is higher in industries with more supplier-cost dispersion, an indication of higher expected search opportunities.

Keywords: input sourcing; relational contracts; supplier search (search for similar items in EconPapers)
JEL-codes: F23 D23 L23 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-cna, nep-cta, nep-int and nep-tra
Date: 2017-11
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http://cep.lse.ac.uk/pubs/download/dp1515.pdf (application/pdf)

Related works:
Working Paper: Supplier Search and Rematching in Global Sourcing - Theory and Evidence from China (2017) Downloads
Working Paper: Supplier Search and Re-matching in Global Sourcing - Theory and Evidence from China (2017) Downloads
Working Paper: Supplier search and re-matching in global sourcing: theory and evidence from China (2017) Downloads
Working Paper: Supplier search and re-matching in global sourcing: Theory and evidence from China (2017) Downloads
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