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How Wide Is the Firm Border?

Enghin Atalay (), Ali Hortacsu, Mary Jialin Li and Chad Syverson

No 19-37, Working Papers from Federal Reserve Bank of Philadelphia

Abstract: We examine the within- and across-firm shipment decisions of tens of thousands of goods-producing and goods-distributing establishments. This allows us to quantify the normally unobservable forces that determine firm boundaries; that is, which transactions are mediated by ownership control, as opposed to contracts or markets. We find firm boundaries to be an economically significant barrier to trade: Having an additional vertically integrated establishment in a given destination ZIP code has the same effect on shipment volumes as a 40 percent reduction in distance. These effects are larger for high value-to-weight products, for faraway destinations, for differentiated products, and for IT-intensive industries.

Pages: 61 pages
Date: 2019-10-01
New Economics Papers: this item is included in nep-cse
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Related works:
Journal Article: How Wide Is the Firm Border? (2019) Downloads
Working Paper: How Wide is the Firm Border? (2018) Downloads
Working Paper: How Wide Is the Firm Border? (2017) Downloads
Working Paper: How Wide Is the Firm Border? (2017) Downloads
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DOI: 10.21799/frbp.wp.2019.37

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