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Production Networks, Geography and Firm Performance

Andrew Bernard, Andreas Moxnes and Yukiko Saito

No 21082, NBER Working Papers from National Bureau of Economic Research, Inc

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.

JEL-codes: D22 D85 F14 L10 L14 R12 (search for similar items in EconPapers)
Date: 2015-04
New Economics Papers: this item is included in nep-bec, nep-com, nep-cse, nep-geo, nep-int, nep-net, nep-sbm and nep-ure
Note: IO ITI
References: Add references at CitEc
Citations: View citations in EconPapers (44)

Published as Andrew B. Bernard & Andreas Moxnes & Yukiko U. Saito, 2019. "Production Networks, Geography, and Firm Performance," Journal of Political Economy, vol 127(2), pages 639-688.

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Related works:
Journal Article: Production Networks, Geography, and Firm Performance (2019) Downloads
Working Paper: Production networks, geography and firm performance (2016) Downloads
Working Paper: Production networks, geography and firm performance (2016) Downloads
Working Paper: Production Networks, Geography, and Firm Performance (2016) Downloads
Working Paper: Production Networks, Geography and Firm Performance (2015) Downloads
Working Paper: Production Networks, Geography and Firm Performance (2015) Downloads
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