Thursday March 20, 2025
14h-15h15 - CEPII, 20 avenue de Ségur, 75007 Paris
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The CEPII research seminar "The Costs of Exploration: How does Access to Potential Suppliers affect Firm Performance?"
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Diana Beltekian will present her article "The Costs of Exploration: How does Access to Potential Suppliers affect Firm Performance?", co-authored by Vatsal Khandelwal.
How do the costs of exploring new suppliers affect firm supplier choice and firm outcomes? The authors exploit panel data on Colombian importer-exporter networks and leverage a natural experiment that increases the ease of access to potential suppliers. The authors leverage the expansion of the Panama Canal and its differential effect on firms on the Northern and Western coasts, to show (i) how it affects the set of potential suppliers for each firm-product pair in a given location and (ii) firm performance including the prices they pay relative to other firms in the market. The authors find that firms in locations that exogenously benefit from the expansion, through a larger exposure to unmet suppliers, are significantly more likely to switch to new suppliers within a product and benefit by procuring the products at lower prices relative to the market median. Further, the authors find that this effect is more pronounced for heterogeneous firm-product markets that experience more price variation since the additional information about potential suppliers is likely to be more lucrative in these cases. Finally, the authors decompose the effect into a direct and indirect component to show how a reduction in search frictions can affect firms via peers in their location. BY INVITATION ONLY Contact: conferences  cepii.fr |
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