[en] 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.
Disciplines :
Microeconomics
Author, co-author :
Bernard, Andrew B.; Dartmouth College, Center for Economic Performance, Center for Economic Policy Research, National Bureau of Economic Research, United States
Dhyne, Emmanuël ; Université de Mons - UMONS > Faculté Warocqué d'Economie et de Gestion > Service d'Economie
Magerman, Glenn; Université Libre de Bruxelles, Center for Economic Policy Research, National Bank of Belgium, Belgium
Manova, Kalina; University College London, Center for Economic Policy Research, and Center for Economic Performance, United Kingdom
Moxnes, Andreas; University of Oslo and Center for Economic Policy Research, Norway
Language :
English
Title :
The Origins of Firm Heterogeneity: A Production Network Approach
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