Working Paper: NBER ID: w18020
Authors: Enghin Atalay; Ali Hortacsu; Chad Syverson
Abstract: We use broad-based yet detailed data from the economy's goods-producing sectors to investigate firms' ownership of production chains. It does not appear that vertical ownership is primarily used to facilitate transfers of goods along the production chain, as is often presumed: Roughly one-half of upstream plants report no shipments to their firms' downstream units. We propose an alternative explanation for vertical ownership, namely that it promotes efficient intra-firm transfers of intangible inputs. We show evidence consistent with this hypothesis, including the fact that upon a change of ownership, an acquired plant begins to resemble the acquiring firm along multiple dimensions.
Keywords: No keywords provided
JEL Codes: L0; L23; L24
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| vertical ownership (L22) | efficient transfers of intangible inputs (F16) |
| ownership changes (G32) | shifts in operational practices (L23) |
| ownership changes (G32) | shifts in output characteristics (O41) |
| vertical ownership (L22) | productivity levels of plants (E23) |