| Number |
CREPEDP-167 |
| Publication Date |
February 2025; revised in February 2026 |
| Title |
Delayed Network Formation of Young Firms:
Micro Estimates and Macro Consequences |
| Authors |
Hiroyuki Asai and Makoto Nirei
|
| Abstract |
This paper documents the delayed network formation of young firms and quantifies
its macroeconomic consequences. Leveraging Japanese firm-to-firm transaction data,
we show that young firms accumulate supplier and buyer relationships only gradually
after entry, even controlling for standard age-related growth determinants. A calibrated
general equilibrium model incorporating firms’ network-formation decisions reveals
age-decaying networking wedges that raise entrants’ effective supplier- and buyeracquisition
costs by 23% and 9%, respectively. Eliminating these wedges removes the
post-entry networking delay, raises welfare and entry. Yet average partners per firm
can fall: increased firm mass compresses average firm scale and reduces the return from
each link.
and restructuring supply chains in the economy. |
| Keywords |
Production Networks, Firm Dynamics, Misallocation
|
| Other information |
Paper in English (40 pages) |