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dc.titleGlobal Production Networks and Imperfect Competition
dc.contributor.authorHuang, Hanwei
dc.contributor.authorManova, Kalina Bojidarova
dc.contributor.authorPerello Perez, Oscar Ignacio
dc.contributor.authorPisch, Frank
dc.contributor.orgunitProductivity, Trade and Innovation Sector
dc.date.available2026-05-15T00:05:00
dc.date.issue2026-05-15T00:05:00
dc.description.abstractHow do global production networks and market structure interact to shape the welfare effects of trade and competition policy? We develop a model with two-sided firm heterogeneity, matching frictions, and imperfect supplier competition. More productive buyers match with more suppliers, inducing tougher competition among them, lower input costs, and higher profits. Entry upstream thus benefits primarily high-productivity buyers, while lower trade or matching costs favor mid-productivity buyers. Reduced-form evidence confirms that larger French and Chilean firms import higher quantities at lower prices as more Chinese suppliers enter, and that suppliers charge diversified buyers lower markups. We estimate the model by adapting recent methods for combinatorial, discrete-choice problems. Counterfactuals reveal that the interaction of endogenous networks and markups significantly amplifies the gains from policies that facilitate supplier entry or firm matching, as well as from modern trade agreements that combine trade cost cuts with such policies.
dc.format.extent73
dc.identifier.doihttp://dx.doi.org/10.18235/0014040
dc.identifier.urlhttps://publications.iadb.org/publications/english/document/Global-Production-Networks-and-Imperfect-Competition.pdf
dc.language.isoen
dc.publisherInter-American Development Bank
dc.subjectProduction and Business Cycle
dc.subjectExport Activity
dc.subjectService Provider
dc.subjectInternational Trade Policy
dc.subjectSmall Business
dc.subjectCompetitiveness
dc.subjectIntegration and Trade
dc.subjectForest Resource
dc.subjectTrading Cost
dc.subject.jelcodeD24 - Production • Cost • Capital • Capital, Total Factor, and Multifactor Productivity • Capacity
dc.subject.jelcodeF10 - Trade: General
dc.subject.jelcodeF12 - Models of Trade with Imperfect Competition and Scale Economies • Fragmentation
dc.subject.jelcodeF14 - Empirical Studies of Trade
dc.subject.jelcodeL11 - Production, Pricing, and Market Structure • Size Distribution of Firms
dc.subject.jelcodeL22 - Firm Organization and Market Structure
dc.subject.keywordsProduction networks;Matching frictions;Imperfect competition;Gains from trade;Trade;Competition policy
dc.typeWorking Papers
idb.identifier.pubnumberIDB-WP-01828
idb.operationRG-E2032
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