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Globalization and Vertical Structure: An Empirical Investigation

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  • Buehler, Stefan

    ()

  • Burghardt, Dirk

    ()

Abstract

This paper studies the effect of trade facilitation on vertical firm structure using plant-level data from Switzerland. Based on the Business Census and the Input-Output table, we first calculate a binary measure of vertical integration for all plants registered in Switzerland. We then estimate the effect of a Mutual Recognition Agreement with the European Union on the plants' probability of being vertically integrated. Adopting a difference-in-differences approach, we find that this policy change reduced the treated plants' probability of being vertically integrated by about 10 percent. Our results are consistent with recent work in international trade theory.

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File URL: http://www1.vwa.unisg.ch/RePEc/usg/econwp/EWP-1310.pdf
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Bibliographic Info

Paper provided by University of St. Gallen, School of Economics and Political Science in its series Economics Working Paper Series with number 1310.

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Length: 33 pages
Date of creation: Mar 2013
Date of revision:
Handle: RePEc:usg:econwp:2013:10

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Related research

Keywords: Vertical Integration; Hold-up Risk; Theory of the Firm; Globalization; Trade Barriers; Natural Experiment; Plant-Level Data;

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References

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  1. Ali Hortaçsu & Chad Syverson, 2007. "Cementing Relationships: Vertical Integration, Foreclosure, Productivity, and Prices," Journal of Political Economy, University of Chicago Press, University of Chicago Press, vol. 115, pages 250-301.
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Cited by:
  1. Burghardt, Dirk, 2013. "The Impact of Trade Policy on Industry Concentration in Switzerland," Economics Working Paper Series 1317, University of St. Gallen, School of Economics and Political Science.

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