Monica Morlacco from the University of Southern California will present "Market Boundaries in Buyer-Supplier Networks"

Abstract: We study how the structure of buyer-supplier networks shapes the effective size of markets and the scope of competition among firms. We develop a framework to infer the extent to which unmatched suppliers–those outside a buyer’s existing links–discipline prices within ongoing relationships. We implement this framework using U.S. importer-exporter transaction data linked to firm-specific cost shocks from anti-dumping and countervailing duty activations. Our estimates reveal substantial but incomplete competitive pressure from unmatched suppliers, suggesting that network frictions narrow the effective boundaries of input markets. These findings offer a new measure of market connectedness and have implications for the design of trade and industrial policies in settings where input markets are concentrated and relationships are sticky.