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Production Networks, Geography and Firm Performance

NBER Working Paper Series, 2015-04, p.21082 [Peer Reviewed Journal]

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Title:
Production Networks, Geography and Firm Performance
Author: Bernard, Andrew B ; Moxnes, Andreas ; Saito, Yukiko U
Subjects: Analysis ; Costs ; Customers ; Economic theory ; Geography ; High speed rail ; Industrial Organization ; Infrastructure ; International trade ; International Trade and Investment ; Outsourcing ; Production costs ; Productivity ; Studies ; Suppliers ; Vendor supplier relations
Is Part Of: NBER Working Paper Series, 2015-04, p.21082
Description: 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.
Publisher: Cambridge: National Bureau of Economic Research
Language: English
Identifier: ISSN: 0898-2937
DOI: 10.3386/w21082
Source: Alma/SFX Local Collection
ProQuest Central

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