Production networks, geography, and firm performance

Andrew B. Bernard, Andreas Moxnes, Yukiko Saito

Research output: Contribution to journalArticle

9 Citations (Scopus)

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
Pages (from-to)639-688
Number of pages50
JournalJournal of Political Economy
Volume127
Issue number2
DOIs
Publication statusPublished - 2019 Apr 1

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ASJC Scopus subject areas

  • Economics and Econometrics

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