Recently collected data show that, within any manufacturing industry, vertically integrated firms tend to have larger, higher productivity plants, account for the bulk of sales, and also sell externally most of the inputs they produce. In a weak contracting environment characteristic of...

It is well established that employee spinoffs learn their parents’ technologies, but little is known about their demand-side learning. We exploit the identification in international trade data of parent markets (countries) to investigate whether exporting employee spinoffs of exporting parents...

A network/search view of international trade in differentiated products is proposed. It is shown that this view can explain the importance of ethnic and extended family ties in trade, the success of diversified trading intermediaries such as Japan's sogo shosha, and the ubiquity of government...

Empirical studies have consistently found that skilled-labor abundant countries tend to export skilled-labor intensive manufactured goods. Yet these countries also have higher wages for skilled workers, causing them to be net importers through migration of skilled labor from unskilled-labor...

When will an industry subject to agglomeration economies move from an old, high-cost site to a new, low-cost site? It is argued that history, in the form of sunk costs resulting from the operation of many firms at a site, creates a first-mover disadvantage that can prevent relocation. It is...

We model network formation in a firm. Agents learn about the quality of their working relationships with each other. Their good relationships become their networks. Accumulating relationships becomes increasingly costly, however. Over time agents become less open to forming relationships with...

This paper draws on household survey data from countries of all income levels to measure how average unemployment rates vary with income per capita. We document that unemployment is increasing with GDP per capita. Furthermore, we show that this fact is accounted for almost entirely by...

Client relationships create value, which employees may try to wrest from their employers by setting up their own firms. If when an employer and worker establish a relationship they cannot contract on the output and profits of the worker's prospective new firm, the employer counters by inducing...

Using a comprehensive linked employer-employee database from Brazil for the period 1995-2001, we are able for the first time to compare firms founded as employee spinoffs to new firms without parents and to diversification ventures of existing firms entering a new industry. Employee spinoffs are...

What determines the boundary of multinational firms? According to Williamson (1975), a potential rationale for vertical integration is to facilitate adaptation in a world where uncertainty is resolved over time. This paper offers the first empirical analysis of the impact of adaptation on the...