Production networks, geography, and firm performance

Andrew B. Bernard, Andreas Moxnes, Yukiko Saito

Research output: Contribution to journalArticle

Abstract

This paper examines the importance of buyer-supplier relationships for firm performance. We develop a model in which firms outsource tasks and search for suppliers. Lower search and outsourcing costs lead firms to search more and find better suppliers, which in turn drives down marginal costs. We test the theory by exploiting the opening of a high-speed train line in Japan, which lowered the cost of passenger travel but left shipping costs unchanged. Using an exhaustive data set on firms’ buyer-seller linkages, we find significant improvements in firm performance as well as creation of buyer-seller links, consistent with the model.

Original languageEnglish
JournalJournal of Political Economy
DOIs
Publication statusPublished - 2019 Jan 1
Externally publishedYes

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Geography
Production networks
Costs
Firm performance
Suppliers
Seller
Buyers
Marginal cost
Train
Japan
Linkage
Outsourcing
Buyer-supplier relationships
Shipping

ASJC Scopus subject areas

  • Economics and Econometrics

Cite this

Production networks, geography, and firm performance. / Bernard, Andrew B.; Moxnes, Andreas; Saito, Yukiko.

In: Journal of Political Economy, 01.01.2019.

Research output: Contribution to journalArticle

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