Industry Networks and the Geography of Firm Behavior

2021 ◽  
Author(s):  
William Grieser ◽  
James LeSage ◽  
Morad Zekhnini
Keyword(s):  
Peer Effects ◽  
Network Effects ◽  
Firm Behavior ◽  
Agglomeration Economies ◽  
Industrial Clusters ◽  
Investment Behavior ◽  
Financial Policies ◽  
Supply Chain Networks ◽  
Propagation Effects ◽  
Quasi Experimental

Using a network approach that circumvents well-known challenges in estimating peer effects, we show that interactions with a firm’s geographic neighbors play a significant causal role in corporate investment behavior and a modest role in financial policies and firm performance. Moreover, these geography network effects are almost entirely driven by propagation effects through product market and supply chain networks. We corroborate our findings in a quasi-experimental framework that allows for spillovers in treatment effects. Our findings help rationalize industrial clusters (e.g., Silicon Valley), as they illustrate that agglomeration economies are substantial and operate predominantly within industry boundaries. This paper was accepted by David Simchi-Levi, finance.

scholarly journals Corruption, Trade Costs, and Gains from Tariff Liberalization: Evidence from Southern Africa

2016 ◽  
Vol 106 (10) ◽  
pp. 3029-3063 ◽  
Author(s):  
Sandra Sequeira
Keyword(s):  
Southern Africa ◽  
Firm Behavior ◽  
Trade Flow ◽  
Primary Data ◽  
Public Officials ◽  
Trade Elasticities ◽  
Experimental Variation ◽  
Quasi Experimental ◽  
Tariff Liberalization ◽  
Import Behavior

This paper exploits quasi-experimental variation in tariffs in southern Africa to estimate trade elasticities. Traded quantities respond only weakly to a 30 percent reduction in the average nominal tariff rate. Trade flow data combined with primary data on firm behavior and bribe payments suggest that corruption is a potential explanation for the observed low elasticities. In contexts of pervasive corruption, even small bribes can significantly reduce tariffs, making tariff liberalization schemes less likely to affect the extensive and the intensive margins of firms' import behavior. The tariff liberalization scheme is, however, still associated with improved incentives to accurately report quantities of imported goods, and with a significant reduction in bribe transfers from importers to public officials. (JEL D22, D73, F13, H83, O17, O19, O24)

Network effects in corporate financial policies

2021 ◽  
Author(s):  
William Grieser ◽  
Charles Hadlock ◽  
James LeSage ◽  
Morad Zekhnini
Keyword(s):  
Network Effects ◽  
Financial Policies

Industrial Hubs

2020 ◽  
pp. 113-129
Author(s):  
Hisaki Kono
Keyword(s):  
Selection Bias ◽  
Economies Of Scale ◽  
Knowledge Spillovers ◽  
Empirical Studies ◽  
Labour Productivity ◽  
Sample Selection ◽  
Agglomeration Economies ◽  
Industrial Clusters ◽  
Infrastructure Improvement ◽  
Industrial Zones

Agglomeration economies, including economies of scale, better employee–employer matching and supplier–buyer matching, and knowledge spillovers, play a key role in the formation of large cities and industrial clusters. This chapter introduces models of economic geography that explain the process of agglomeration and formation of industrial clusters. These models describe how the reduction of transportation costs and development of labour productivity affect the formation of industrial clusters. Then we discuss important issues in empirical analysis, such as selection bias, sample selection bias, relocation effects, and external validity. Finally empirical studies on agglomeration economies, and the effects of industrial zones and infrastructure improvement, are reviewed. Empirical results of the effectiveness of industrial zones and infrastructure improvement are mixed, suggesting the importance of careful diagnosis of the economic conditions and an understanding of economic structure for choosing appropriate policies and interventions.

scholarly journals Foreign state investment and international politics: mapping state-led geoeconomic competition in the global political economy

2021 ◽  
Author(s):  
Milan Babic
Keyword(s):  
Political Economy ◽  
International Politics ◽  
Global Scale ◽  
Industrial Clusters ◽  
System Level ◽  
Investment Behavior ◽  
Global Political Economy ◽  
Foreign State ◽  
State Investment ◽  
First Time

What are the consequences of the rise of foreign state-led investment for international politics? Existingresearch oscillates between a “geopolitical” and a “commercial” logic driving this type of investmentand is thus inconclusive about its wider international reverberations. In this paper, I suggest goingbeyond this dichotomy by analyzing its systemic consequences. Conceptually, I argue that foreign stateinvestment creates system-level patterns, which have consequences for international relations: similarsectoral and geographic investment behavior carries the potential for intensified geoeconomiccompetition and conflict. I map this phenomenon on a global scale for the first time, using the largestdataset on foreign state investment. Empirically, I show how foreign state investment is highlyconcentrated in Europe, North America and East Asia, and among a few powerful states as owners. Itis especially European geo-industrial clusters that represent opportunities for such competitivedynamics. The findings also suggest that three global industries – energy production, high-techmanufacturing, and transportation and logistics – form the key areas for current and future state-ledcompetition. With these conceptual and empirical contributions, the paper illuminates the increasingpresence of states as owners in the global political economy, and its consequences for internationalpolitics

Product Differentiation in Two-sided Market

2019 ◽  
Vol 2019 (1) ◽  
pp. 50-70
Author(s):  
Anna Borovkova
Keyword(s):  
Game Theory ◽  
Product Differentiation ◽  
Network Effects ◽  
Contract Theory ◽  
Firm Behavior ◽  
Industrial Economics ◽  
Indirect Network Effects ◽  
Test Platform

In this paper we present the results of the analysis of firm behavior in two-sided market with product differentiation. Based on the developed model, we study the conditions when it is profitably for a firm to launch two versions of a product: full and test platform models. In our analysis we draw on the methods of microeconomics, industrial economics, game theory and contract theory. The main conclusions confirm the benefit from versioning strategy in a firm in case of strong indirect network effects in the market between the two groups of agents. Product versioning allows the firm to separate agents more effectively: the first group with high product and connection value and the second group that generates high network effects. We noted that product differentiation is preferable for agents from the second group.

Modeling of Across-Chain Network Dynamic Competition for MNC in Industrial Cluster

2013 ◽  
pp. 236-256
Author(s):  
Chunling Liu ◽  
Jizi Li ◽  
Guo Li ◽  
Xiaogang Cao
Keyword(s):  
Foreign Direct Investment ◽  
Variational Inequality ◽  
Direct Investment ◽  
Industrial Clusters ◽  
Network Dynamic ◽  
Network Equilibrium ◽  
Supply Chain Networks ◽  
Competitive Edge ◽  
Network Equilibrium Problem ◽  
Modified Algorithm

The huge market and perfect production system in China are attracting more multi-national companies’ interest to invest in China in the form of Foreign Direct Investment (FDI). Therefore, multi-national companies are willing to integrate and optimize global supply chain networks of their own, which enable them to reduce cost and improve market response. As a result, multi-national companies usually embed into local industrial clusters through financial and technological comparative merits to sharpen their competitive edge. This paper considers the across-chain network equilibrium problem involving process of competition and melting between this new global chain and an already existing local chain. The authors model the optimizing behavior of these two chains, derive the equilibrium conditions, and establish the variational inequality formulation, and solve it by using the modified algorithm. Finally, the authors illustrate the model through numerical example and discuss relationships among the price, quantity, technological progress, and satisfaction among two dynamic phases.

scholarly journals Unemployment Insurance Taxes and Labor Demand: Quasi-Experimental Evidence from Administrative Data

2021 ◽  
Vol 13 (1) ◽  
pp. 266-293 ◽  
Author(s):  
Andrew C. Johnston
Keyword(s):  
Unemployment Insurance ◽  
Great Recession ◽  
Firm Behavior ◽  
Labor Demand ◽  
Tax Rates ◽  
Payroll Tax ◽  
Administrative Records ◽  
The Great Recession ◽  
Quasi Experimental ◽  
Regression Kink Design

To finance unemployment insurance, states raise payroll tax rates on employers who engage in layoffs. Tax rates are, therefore, highest for firms after downturns, potentially hampering labor-market recovery. Using full-population, administrative records from Florida, I estimate the effect of these tax increases on firm behavior leveraging a regression kink design in the tax schedule. Tax hikes reduce hiring and employment substantially, with no effect on layoffs or wages. The results imply unanticipated costs of the financing regime which reduce the optimal benefit by a quarter and account for 12 percent of the unemployment in the wake of the Great Recession. (JEL D22, E24, H25, H32, H71, J23, J65)

scholarly journals Agglomeration Economies: Population, Density, and Network Effects

2011 ◽  
Vol 2 (10) ◽  
Author(s):  
Thomas J. White
Keyword(s):  
Population Density ◽  
Least Squares ◽  
Significant Role ◽  
Network Effects ◽  
Total Population ◽  
Agglomeration Economies ◽  
Ordinary Least Squares ◽  
City Size ◽  
Optimal City Size ◽  
Benefits And Costs

This paper builds on the optimal city size literature by examining factors that influence location benefits and costs.  Total population, population density, employment type, and networking are evaluated using ordinary least squares.  Results indicate that population density may play a more significant role in predicting average location benefits and average location costs than population. 

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