Bernard, AB;
Dhyne, E;
Magerman, G;
Manova, K;
Moxnes, A;
(2022)
The Origins of Firm Heterogeneity: A Production Network Approach.
Journal of Political Economy
, 130
(7)
pp. 1765-1804.
10.1086/719759.
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Abstract
We explore firm size heterogeneity in production networks. In comprehensive data for Belgium, firms with more customers have higher total sales but lower sales and lower market shares per customer. Downstream factors, especially the number of customers, explain the vast majority of firm size dispersion. We rationalize these facts with a model of network formation and two-dimensional firm heterogeneity. Higher productivity generates more matches and larger market shares among customers. Higher relationship capability generates more customers and higher sales. Model estimates suggest a strong negative correlation between productivity and relationship capability and potentially large welfare gains from improving relationship capability.
| Type: | Article |
|---|---|
| Title: | The Origins of Firm Heterogeneity: A Production Network Approach |
| Open access status: | An open access version is available from UCL Discovery |
| DOI: | 10.1086/719759 |
| Publisher version: | https://doi.org/10.1086/719759 |
| Language: | English |
| Additional information: | This version is the author accepted manuscript. For information on re-use, please refer to the publisher’s terms and conditions. |
| Keywords: | Firm size heterogeneity, productivity, relationship capability, production network, network formation, matching costs |
| UCL classification: | UCL UCL > Provost and Vice Provost Offices > UCL SLASH UCL > Provost and Vice Provost Offices > UCL SLASH > Faculty of S&HS UCL > Provost and Vice Provost Offices > UCL SLASH > Faculty of S&HS > Dept of Economics |
| URI: | https://discovery.ucl.ac.uk/id/eprint/10127957 |
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