EconPapers    
Economics at your fingertips  
 

Buyer-Supplier Networks and Aggregate Volatility

Takayuki Mizuno, Wataru Souma and Tsutomu Watanabe

Discussion papers from Research Institute of Economy, Trade and Industry (RIETI)

Abstract: This paper investigates the structure and evolution of customer-supplier networks in Japan using a unique dataset that contains information on customer and supplier linkages for over 500,000 incorporated non-financial firms for the five years from 2008 to 2012. We find, first, that the number of customer links is unequal across firms: the customer link distribution has a power-law tail with an exponent of unity (i.e., it follows Zipf's law). We interpret this as implying that competition among firms to acquire new customers yields winners that attract a large number of customers, as well as losers that end up with fewer customers. We also show that the shortest path length for any pair of firms is, on average, 4.3 links. Second, we find that link switching is relatively rare. Our estimates indicate that 92% of customer links and 93% of supplier links survive each year. Third and finally, we find that firm growth rates tend to be more highly correlated as the closer two firms are to each other in a customer-supplier network (i.e., the smaller is the shortest path length for the two firms). This suggests that a non-negligible portion of firm growth fluctuations stem from the propagation of microeconomic shocks—shocks that affect a specific firm—through the customer-supplier chains.

Pages: 30 pages
Date: 2015-05
New Economics Papers: this item is included in nep-bec, nep-com, nep-net and nep-tid
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2) Track citations by RSS feed

Downloads: (external link)
https://www.rieti.go.jp/jp/publications/dp/15e056.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eti:dpaper:15056

Access Statistics for this paper

More papers in Discussion papers from Research Institute of Economy, Trade and Industry (RIETI) Contact information at EDIRC.
Bibliographic data for series maintained by TANIMOTO, Toko ().

 
Page updated 2023-01-02
Handle: RePEc:eti:dpaper:15056