Endogenous production networks with fixed costs

• 成果类型: Article
• 署名作者: Dhyne, Emmanuel; Kikkawa, Ayumu Ken; Kong, Xianglong; Mogstad, Magne; Tintelnot, Felix
• 署名单位: European Central Bank; National Bank of Belgium; University of British Columbia; University of Chicago; National Bureau of Economic Research
• 刊物名称: JOURNAL OF INTERNATIONAL ECONOMICS
• ISSN/ISSBN: 0022-1996
• DOI: 10.1016/j.jinteco.2023.103841
• 发表日期: 2023
• 关键词: production networks; Endogenous network formation

摘要

We develop a model of endogenous production networks with fixed costs in the formation of links between firms. We show that the closed economy equilibrium is unique if the set of feasible networks consists only of networks that are acyclic and the buyer initiates the link formation while having full bargaining power in price negotiations with the supplier. We provide examples of multiple equilibria if the supplier initiates the link formation in both cyclic and acyclic feasible networks or if the buyer initiates the link formation in a cyclic production network. We take the acyclic production network model to Belgian data on firm-to-firm production networks and show that it matches well the salient features of the network. The model generates substantial churn in domestic firm-to-firm linkages in response to trade shocks, while delivering only moderately different welfare changes compared to a model with fixed linkages.