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Shifting the Boundaries,Pricing Down the Chain: Firm-Level Evidence

Author

Listed:
  • Kossi Messanh Agbekponou
  • Iaria Fusacchia

Abstract

Global valuechainshavemadefirmboundarydecisionscentraltoperformance,yet their implicationsforexportpricesandshocktransmissionremainpoorlyunderstood. Wedevelopaframeworkinwhichverticalintegrationandproductivityjointlyshape pricing andpass-throughviacostsandmarkupsunderNash-in-Nashbargaining.Inte- gration eliminatesdoublemarginalizationbutintroducesorganizationalcostfrictions, while productivityaffectsbothcostsandorganizationalchoices,generatingacounter- intuitivesortinginwhichlow-productivityfirmsintegrateandhigh-productivityfirms outsource. UsingFrenchcustomsdatamatchedtoAMADEUSbalance-sheetinfor- mation foragri-foodfirms(2002–2017),andaninstrumental-variablestrategybasedon exogenous foreignshocks,wefindthatintegrationreducesexportpricesmainlythrough cumulativemarkupcompression,whileproductivitylowerspricesviacostsbutincreases markups throughsorting.Shocktransmissionisheterogeneous:non-integratedfirms adjust throughmarkups,integratedfirmsthroughcosts,andproductivitydampensboth channels.Pass-throughthusemergesasanequilibriumoutcomeoffirmorganization and productivity.

Suggested Citation

  • Kossi Messanh Agbekponou & Iaria Fusacchia, 2026. "Shifting the Boundaries,Pricing Down the Chain: Firm-Level Evidence," Departmental Working Papers of Economics - University 'Roma Tre' 0293, Department of Economics - University Roma Tre.
    • Handle: RePEc:rtr:wpaper:0293
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    References listed on IDEAS

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    Keywords

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    JEL classification:

    • D21 - Microeconomics - - Production and Organizations - - - Firm Behavior: Theory
    • D22 - Microeconomics - - Production and Organizations - - - Firm Behavior: Empirical Analysis
    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection
    • F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies; Fragmentation
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
    • L22 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Organization and Market Structure
    • L23 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Organization of Production

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