Raluca Ecaterina Dragusanu
Firm-to-Firm Matching Along the Global Supply Chain
This paper examines the matching patterns between buyers and sellers at different stages of the global production chain. I construct a new dataset, which links firm-level information on Indian manufacturing exporters from the CMIE-Prowess database with firm-level information on the US importers with whom they engage in trade. To create these matches I use the U.S. import customs data available from the confidential Linked/Longitudinal Firm Trade Transaction Database (LFTTD). LFTTD contains the individual trade transactions of US firms linked with information in the Longitudinal Business Database. The final dataset contains detailed information on the characteristics of a sample of firms that engage in trading relationships from 1995 until 2007 between India and the U.S. I find that on average there is positive assortative matching between U.S. importers and Indian exporters. The average size of a U.S. importer is increasing with the size of the Indian exporter. In addition, the matching patterns vary systematically with the position in the supply chain of the product traded. The strength of the positive matching increases with downstreamness. That is, it is stronger for final goods than intermediate products. I illustrate these mechanisms in a simple model of sequential production with endogenous investment in supplier search, which highlights the importance of complementarities in production as a potential driver of the strength of matching.
Keywords: Supply Chain;
Dragusanu, Raluca. "Firm-to-Firm Matching Along the Global Supply Chain." Diss., November 2013 (JOB MARKET PAPER.)