Endogenous Spatial Production Networks: Quantitative Implications for Trade and Productivity

  • 研討會日期 : 2021-02-08
  • 時間 : 10:30
  • 主講人 : Mr. Piyush Panigrahi
  • 主持人 : Professor Terry Cheung
  • 地點 : online
  • 演講者簡介 : Mr. Panigrahi will receive his Ph.D. in Economics from University of California, Berkeley in 2021. His research fields are International Trade, Economic Geography, Economic Growth, and Firm Dynamics. He is applying for a position of the Institute of Economics, Academia Sinica now.
  • 演講摘要 : In modern economies, production is organized in large-scale complex networks of firms trading intermediate inputs with each other. In this paper, I develop a model of trade between multiple locations where input-output linkages between firms form endogenously. Differences in production costs across firms arise not just from differences in productivity but also from finding the most cost-effective suppliers of intermediate inputs. 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. Despite its rich structure, I show that the model can be estimated via maximum likelihood using a multinomial logit model of supplier choice for intermediate inputs. I estimate the model using novel administrative data on transactions between Indian firms located across 141 districts. The estimated model reproduces new stylized facts about the margins of firms’ sales and trade that I document using Indian micro-data on firm-to-firm linkages. I propose a procedure to conduct counterfactual analysis that accounts for the randomness in network formation between firms. Using the estimated model, I find that a 10% decline in inter-state border frictions 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.