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Production Networks and Firm-level Elasticities of Substitution

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dc.contributor.authorFujiy, Brian C.
dc.contributor.authorGhose, Devaki
dc.contributor.authorKhanna, Gaurav
dc.date.accessioned2024-05-23T14:35:01Z
dc.date.available2024-05-23T14:35:01Z
dc.date.issued2024-05-23
dc.description.abstractThis paper provides one of the first estimates of elasticities of substitution across suppliers within the same product. This paper estimates these elasticities using new real-time administrative tax data on firm-to-firm transactions, with product-level prices and quantities, leveraging geographic and temporal variation from India’s Covid-19 lockdowns to derive causal estimates of these elasticities. Suppliers are highly complementary even at this granular level, with an estimated elasticity of 0.55. The paper shows that the quality of institutions, input specificity, inventories, and time horizons explain the low elasticity. These firm-level complementarities amplify the propagation of negative shocks through production networks, and make connected firms important for shock propagation. In policy counterfactuals, the paper shows that given these complementarities, allowing more connected firms to operate in the face of shocks mitigates output declines non-linearly with the size of the productivity shock.en
dc.identifierhttp://documents.worldbank.org/curated/en/099221305222481417/IDU165af00a1112bd148f61a8701b798b01d483f
dc.identifier.doi10.1596/1813-9450-10782
dc.identifier.urihttps://hdl.handle.net/10986/41586
dc.languageEnglish
dc.language.isoen_US
dc.publisherWashington, DC: World Bank
dc.relation.ispartofseriesPolicy Research Working Paper; 10782
dc.rightsCC BY 3.0 IGO
dc.rights.holderWorld Bank
dc.rights.urihttps://creativecommons.org/licenses/by/3.0/igo/
dc.subjectPRODUCTION NETWORKS
dc.subjectELASTICITIES OF SUBSTITUTION
dc.subjectSHOCK PROPAGATION
dc.subjectRESILIENCE
dc.subjectMICROECONOMICS
dc.subjectMACROECONOMICS
dc.subjectTRADE
dc.subjectINDUSTRY, INNOVATION AND INFRASTRUCTURE
dc.subjectSDG 8
dc.subjectSDG 9
dc.subjectDECENT WORK AND ECONOMIC GROWTH
dc.titleProduction Networks and Firm-level Elasticities of Substitutionen
dc.typeWorking Paper
dspace.entity.typePublication
okr.crossref.titleProduction Networks and Firm-level Elasticities of Substitution
okr.date.disclosure2024-05-23
okr.date.lastmodified2024-05-22T00:00:00Zen
okr.doctypePolicy Research Working Paper
okr.doctypePublications & Research
okr.docurlhttp://documents.worldbank.org/curated/en/099221305222481417/IDU165af00a1112bd148f61a8701b798b01d483f
okr.guid099221305222481417
okr.identifier.docmidIDU-65af00a1-12bd-48f6-a870-b798b01d483f
okr.identifier.doi10.1596/1813-9450-10782
okr.identifier.doihttps://doi.org/10.1596/1813-9450-10782
okr.identifier.externaldocumentum34322856
okr.identifier.internaldocumentum34322856
okr.identifier.reportWPS10782
okr.import.id4232
okr.importedtrueen
okr.language.supporteden
okr.pdfurlhttp://documents.worldbank.org/curated/en/099221305222481417/pdf/IDU165af00a1112bd148f61a8701b798b01d483f.pdfen
okr.region.geographicalWorld
okr.topicMacroeconomics and Economic Growth::Economic Development
okr.topicMacroeconomics and Economic Growth::Macroeconomic Management
okr.topicInternational Economics and Trade::Trade and Multilateral Issues
okr.unitDECRG: Trade & Intl. Integration (DECTI)
relation.isSeriesOfPublication26e071dc-b0bf-409c-b982-df2970295c87
relation.isSeriesOfPublication.latestForDiscovery26e071dc-b0bf-409c-b982-df2970295c87
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