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Supplier search and re-matching in global sourcing: theory and evidence from China

Defever, Fabrice, Fischer, Christian and Suedekum, Jens (2017) Supplier search and re-matching in global sourcing: theory and evidence from China. CEP Discussion Papers (CEPDP1515). Centre for Economic Performance, London School of Economics and Political Science, London, UK.

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Abstract

In this paper, we consider a dynamic search-and-matching problem of a firm with its intermediate input supplier. In our model, a headquarter currently matched with a supplier, has an interest to find and collaborate with a more efficient partner. However, supplier switching through search and rematching is costly. Given this trade-off between the fixed costs and the expected gains from continued search, the process will stop whenever the headquarter has found a sufficiently efficient supplier. Using firm-product-level data of fresh Chinese exporters to the United States, we obtain empirical evidence in line with the predictions of our theory. In particular, we find that the share of short-term collaborations is higher in industries with more supplier-cost dispersion, an indication of higher expected search opportunities

Item Type: Monograph (Discussion Paper)
Official URL: http://cep.lse.ac.uk/
Additional Information: © 2017 The Authors
Divisions: Centre for Economic Performance
Subjects: H Social Sciences > HB Economic Theory
H Social Sciences > HD Industries. Land use. Labor
JEL classification: D - Microeconomics > D2 - Production and Organizations > D23 - Organizational Behavior; Transaction Costs; Property Rights
F - International Economics > F2 - International Factor Movements and International Business > F23 - Multinational Firms; International Business
L - Industrial Organization > L2 - Firm Objectives, Organization, and Behavior > L23 - Organization of Production
Sets: Research centres and groups > Centre for Economic Performance (CEP)
Date Deposited: 01 Feb 2018 12:42
Last Modified: 09 Nov 2020 00:09
Funders: Economic and Social Research Council
URI: http://eprints.lse.ac.uk/id/eprint/86605

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