Production networks, geography and firm performance

Andrew Bernard, Andreas Moxnes and Yukiko Saito

LSE Research Online Documents on Economics from London School of Economics and Political Science, LSE Library

Abstract: This paper examines the importance of buyer-supplier relationships, geography and the structure of the production network in firm performance. We develop a simple model where firms can outsource tasks and search for suppliers in different locations. Low search and outsourcing costs lead firms to search more and find better suppliers. This in turn drives down the firm’s marginal production costs. We test the theory by exploiting the opening of a high-speed (Shinkansen) train line in Japan which lowered the cost of passenger travel but left shipping costs unchanged. Using an exhaustive dataset on firms’ buyer-seller linkages, we find significant improvements in firm performance as well as creation of new buyer-seller links, consistent with the model.

Keywords: production networks; trade; productivity; infrastructure (search for similar items in EconPapers)
JEL-codes: D85 F14 L10 L14 R12 (search for similar items in EconPapers)
Pages: 49 pages
Date: 2016-06
New Economics Papers: this item is included in nep-bec, nep-com, nep-cse, nep-geo, nep-ind, nep-net, nep-sbm, nep-sog and nep-ure
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Citations: View citations in EconPapers (8)

Downloads: (external link)
http://eprints.lse.ac.uk/67664/ Open access version. (application/pdf)

Related works:
Journal Article: Production Networks, Geography, and Firm Performance (2019)
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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