Production Networks, Geography and Firm Performance

Yukiko Saito, Andreas Moxnes and Andrew Bernard

No 311, 2015 Meeting Papers from Society for Economic Dynamics

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. Firms located in close proximity to other markets, and firms that face low search costs, will 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.

Date: 2015
New Economics Papers: this item is included in nep-bec, nep-com, nep-cse, nep-geo, nep-net, nep-sbm and nep-ure
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Citations: View citations in EconPapers (46)

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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 (2016)
Working Paper: Production Networks, Geography and Firm Performance (2015)
Working Paper: Production Networks, Geography and Firm Performance (2015)
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Persistent link: https://EconPapers.repec.org/RePEc:red:sed015:311

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