[Seminaire CREM] "Firms’ boundary choices along agri-food global value chains and export prices" - Faculté Des Sciences Economiques

Abstract:
This paper investigates whether the internal organization of firms in global value chains (GVCs) impacts on their export prices. We conceptualize firm interactions and pricing along GVCs, where the supplier-buyer relationship is governed by bargaining and supplier makes both backward (input markets) and forward (output markets) boundaries choices. We show that supplier's expansion along GVCs by importing more upstream inputs and exporting closer to final demand allows it to charge lower export prices by reducing marginal cost and effectively managing the double marginalization problem. Moreover, these effects are more pronounced for suppliers whose core competence is closer to final consumption, as they are more likely to be efficient in distribution technologies and can more easily avoid the bargaining process. These theoretical predictions are tested using firm-level data on French agri-food industries (from French customs and the AMADEUS database) over the 2002-2018 period. Following recent approaches in the literature, we identify suppliers that participate in GVCs as those that jointly import and export, and measure their position in value chains through the level of transformation (upstreamness) of goods they use and produce. We use unit values as a proxy for export prices and rely on the bilateral stochastic frontier model to measure the division of surplus as a proxy for variable markup that depends on bargaining power. We find empirical evidence broadly supportive of our key predictions.

Co-écrit avec Ilaria Fusacchia