Supplier Search and Rematching in Global Sourcing - Theory and Evidence from China

Arbeitspapier

In this paper, we consider a dynamic search-and-matching problem of a firm with its intermediate input supplier. In our model, a headquarter currently matched with a supplier, has an interest to find and collaborate with a more efficient partner. However, supplier switching through search and re-matching is costly. Given this trade-off between the fixed costs and the expected gains from continued search, the process will stop whenever the headquarter has found a sufficiently efficient supplier. Using firm-product-level data of fresh Chinese exporters to the United States, we obtain empirical evidence in line with the predictions of our theory. In particular, we find that the share of short-term collaborations is higher in industries with more supplier-cost dispersion, an indication of higher expected search opportunities.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: CESifo Working Paper ; No. 6748

Classification and Topics

• Classification: Wirtschaft ; Multinational Firms; International Business ; Organizational Behavior; Transaction Costs; Property Rights ; Organization of Production
• Subject: input sourcing ; relational contracts ; supplier search

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Defever, Fabrice ; Fischer, Christian ; Suedekum, Jens
• Event: Veröffentlichung
• (who): Center for Economic Studies and ifo Institute (CESifo)
• (where): Munich
• (when): 2017

Further information

• Handle: http://hdl.handle.net/10419/173024
• Last update: 10.03.2025, 11:43 AM CET