Production and Ownership Networks

Cheng Chen, Chang Sun and Hongyong Zhang

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

Abstract: Using data on both buyer-supplier and owner-subsidiary links between Japanese firms, we characterize the interconnection between production and ownership networks. In the cross-section, we find that the majority of the owner-subsidiary links are also buyer-supplier links, thus highlighting the role of goods or services transactions in vertical integration. In addition, we find that firms are more likely to engage with buyers/suppliers that have already been used by related parties, thereby suggesting an indirect benefit of integration. Finally, we show evidence that more capable firms are more likely to integrate buyers/suppliers conditional on the number of buyers/suppliers. As firms grow, however, they rely less on related buyers/suppliers and more on unrelated ones.

Pages: 32 pages
Date: 2023-06
New Economics Papers: this item is included in nep-bec and nep-com
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Persistent link: https://EconPapers.repec.org/RePEc:eti:dpaper:23039

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