Title: Firm Heterogeneity and Imperfect Competition in Global Production Networks
Speaker: HUANG Hanwei, City University of Hong Kong
Time: 14:00 pm, October 21, 2024
Venue: Room 105, Building No.12, Wushan Campus
Introduction to the speaker:
Hanwei Huang is an Assistant Professor at the City University of Hong Kong, a Research Associate at the Centre for Economic Performance, London School of Economics, and a visiting scholar at Tsinghua University. He got his Ph.D. in Economics from the London School of Economics in 2018 and worked as a postdoctoral research associate at the University College London from 2018-2019. His main research interests include international trade, industrial organization, and economic development. He has published well-cited papers and policy reports on Brexit, which received coverage from leading media, including Bloomberg, the Economist, Financial Times, and Reuters. His current research focuses on how firms and workers deal with supply chain disruptions and buyer-seller networks. Dr. Huang’s research is supported by funding from the CityU and the Hong Kong Research Grant Council. He serves as the associate editor of Economica and co-organized the Hong Kong Online Trade Workshop. He teaches international trade and international finance regularly.
Abstract：
We study the role of firm heterogeneity and imperfect competition for global production networks and the gains from trade. We develop a quantifiable trade model with two-sided firm heterogeneity, matching frictions, and oligopolistic competition upstream. More productive buyers endogenously match with more suppliers, thereby inducing tougher competition among them to enjoy lower input costs and superior performance. Transaction-level customs data confirms that downstream French and Chilean firms import higher values and quantities at lower prices as upstream Chinese markets become more competitive over time, with stronger responses by larger firms. Moreover, suppliers charge more diversified buyers lower mark-ups. Counterfactual analysis indicates that entry upstream benefits high-productivity buyers, while lower matching or trade costs benefit all buyers, with the biggest boost to mid-productivity buyers. All three shocks generate sizeable welfare gains, especially under package reforms. Global production networks thus mediate bigger effects and cross-border spillovers from industrial and trade policies.
