Supply Chains, Technology and Trade: Evidence From Business Micro Data
Paper Session
Sunday, Jan. 8, 2017 3:15 PM – 5:15 PM
Hyatt Regency Chicago, Plaza B
- Chair: John C. Haltiwanger, University of Maryland
The Digital Reorganization of Firm Boundaries: IT Use and Vertical Integration in United States Manufacturing
Abstract
We investigate complementarities between external uses of information technology (IT) and firm boundary decisions following the diffusion of the commercial Internet. Using detailed plant-level data covering roughly 2,500 establishments from the U.S. Census of Manufactures, we focus on the decision to allocate production output to either downstream plants within the same firm or to external customers. Using a differences-in-differences design, we find that IT-enabled coordination with external supply chain partners is associated with a significant decline in downstream vertical integration. Our results are robust to extensive time-varying controls for both internal and external downstream demand, as well as instrumental variables estimation. In addition, we find that the upstream and downstream uses of digital coordination are complementary to each other; the magnitude of the effect is greatest when both suppliers and customers are granted greater visibility into the focal plant’s operations.Standards and Supply Chain Productivity: The Universal Product Code From 1974-1992
Abstract
We study the diffusion of the Universal Product Code, and its links to productivity growth and the reorganization of retail supply chains. To examine the diffusion of the UPC, we match archival data from the Uniform Code Council to manufacturing, wholesale and retail establishments in the Economic Census. We also build a concordance between SIC codes and the product line codes in the Census of Retail Trade that allows us to examine the downstream (retail) impacts of manufacturer and wholesaler UPC adoption. <br /><br />
Our preliminary results suggest that there is a substantial amount of selection in the diffusion process for manufacturers: larger and more productive establishments adopt the UPC code sooner. The next phase of our analysis will seek to measure firm-level productivity impacts of UPC adoption, and to establish whether the benefits of UPC adoption are concentrated upstream, downstream at both ends of the supply chain. Finally, we plan to incorporate these findings into a model of aggregate productivity growth that links UPC adoption to both upstream and downstream establishment-level productivity growth and output reallocation.
Trade and Welfare: Exact Aggregation From Micro to Macro
Abstract
We develop a unified framework that exactly rationalizes observed disaggregated trade data as an equilibrium outcome, while permitting exact aggregation to national trade and welfare. Our framework assumes a nested constant elasticity of substitution (CES) demand structure but imposes no restrictions on the economy's production structure. We are therefore able to compute the overall welfare gains from trade under substantially weaker assumptions than in the existing studies and can examine empirically whether the conditions for aggregate moments to be sufficient conditions for the welfare gains from trade are in fact satisfied by the disaggregated data. This exact aggregation property of our approach also enables us to decompose the overall welfare gains from trade into the contributions of new varieties, average variety prices, average variety demand and the heterogeneity of prices and demand across varieties. Our framework requires only data on prices and sales and is easy to implement using the international trade transactions data that are readily available for a number of countries.Discussant(s)
Francine Lafontaine
, University of Michigan
Teresa Fort
, Dartmouth College
Guy Michaels
, London School of Economics and Political Science
Justin Pierce
, Federal Reserve Board
JEL Classifications
- L1 - Market Structure, Firm Strategy, and Market Performance
- O4 - Economic Growth and Aggregate Productivity