TY - JOUR
T1 - Production networks, geography, and firm performance
AU - Bernard, Andrew B.
AU - Moxnes, Andreas
AU - Saito, Yukiko U.
N1 - Publisher Copyright:
© 2019 by The University of Chicago. All rights reserved.
PY - 2019/1/1
Y1 - 2019/1/1
N2 - 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.
AB - 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.
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U2 - 10.1086/700764
DO - 10.1086/700764
M3 - Article
AN - SCOPUS:85062226362
JO - Journal of Political Economy
JF - Journal of Political Economy
SN - 0022-3808
ER -