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Boken, Johannes, Gadenne, Lucie, Nandi, Tushar K. and Santamaria, Marta (2022) Community networks and trade. Working Paper. Coventry: University of Warwick. Department of Economics. Warwick economics research papers series (WERPS) (1442). (Unpublished)
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Official URL: https://warwick.ac.uk/fac/soc/economics/research/w...
Abstract
Do community networks shape firm-to-firm trade in emerging economies? We study the role of communities in facilitating firm-to-firm trade and firm outcomes using data on firm-to-firm transactions and firm owners’ community (castes) affiliations for the universe of medium- and large- sized firms in West Bengal, India. We find that firms are substantially more likely to trade, and trade more, with firms from their own caste. Studying the mechanisms underlying this effect, we find evidence consistent both with castes alleviating trade frictions and taste-based discrimination by firms against those outside their community. Guided by these stylized facts, we develop a model of firm- to- firm trade in which communities affect pair productivity and matching costs and estimate the model using our reduced-form estimates. A counterfactual extending the positive effects of castes on trade to all potential supplier-client pairs would increase the number of network links by 60% and increase average firm-to-firm sales by 20%.
| Item Type: | Working or Discussion Paper (Working Paper) | ||||||
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| Subjects: | H Social Sciences > HD Industries. Land use. Labor H Social Sciences > HT Communities. Classes. Races |
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| Divisions: | Faculty of Social Sciences > Economics | ||||||
| Library of Congress Subject Headings (LCSH): | Trade associations -- India -- West Bengal, Small business -- India -- West Bengal, Caste-based discrimination -- Economic aspects -- India -- West Bengal, Caste -- India -- West Bengal | ||||||
| Series Name: | Warwick economics research papers series (WERPS) | ||||||
| Publisher: | University of Warwick. Department of Economics | ||||||
| Place of Publication: | Coventry | ||||||
| ISSN: | 0083-7350 | ||||||
| Official Date: | December 2022 | ||||||
| Dates: |
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| Number: | 1442 | ||||||
| Institution: | University of Warwick | ||||||
| Status: | Not Peer Reviewed | ||||||
| Publication Status: | Unpublished | ||||||
| Access rights to Published version: | Open Access (Creative Commons) | ||||||
| Open Access Version: |
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