Endogenous Spatial Production Networks: Quantitative Implications for Trade and Productivity

Arbeitspapier

Larger Indian firms selling inputs to other firms tend to have more customers, tend to be used more intensively by their customers, and tend to have larger customers. Motivated by these regularities, I propose a novel empirical model of trade featuring endogenous formation of input-output linkages between spatially distant firms. The empirical model consists of (a) a theoretical framework that accommodates first order features of firm-to-firm network data, (b) a maximum likelihood framework for structural estimation that is uninhibited by the scale of data, and (c) a procedure for counterfactual analysis that speaks to the effects of micro- and macroshocks to the spatial network economy. In the model, firms with low production costs end up larger because they find more customers, are used more intensively by their customers and in turn their customers lower production costs and end up larger themselves. The model is estimated using novel micro-data on firm-to-firm sales between Indian firms. The estimated model implies that a 10% decline in inter-state border frictions in India leads to welfare gains ranging between 1% and 8% across districts. Moreover, over half of the variation in changes in firms’ sales to other firms can be explained by endogenous changes in the network structure.

Angaben zum Objekt

• Sprache: Englisch

Verweise und Beziehungen

• Erschienen in: Series: CESifo Working Paper ; No. 9466

Klassifikation und Themen

• Klassifikation: Wirtschaft ; Neoclassical Models of Trade ; Models of Trade with Imperfect Competition and Scale Economies; Fragmentation ; Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity ; Input-Output Models ; Computable General Equilibrium Models ; Production, Pricing, and Market Structure; Size Distribution of Firms ; Macroeconomic Analyses of Economic Development ; Microeconomic Analyses of Economic Development ; Size and Spatial Distributions of Regional Economic Activity ; General Regional Economics: Econometric and Input-Output Models; Other Models ; Network Formation and Analysis: Theory
• Thema: production networks ; international trade ; economic geography

Beteiligte, Orts- und Zeitangaben

• Ereignis: Geistige Schöpfung
• (wer): Panigrahi, Piyush
• Ereignis: Veröffentlichung
• (wer): Center for Economic Studies and ifo Institute (CESifo)
• (wo): Munich
• (wann): 2021

Weitere Informationen

• Handle: http://hdl.handle.net/10419/249011
• Letzte Aktualisierung: 10.03.2025, 11:43 MEZ