Vertical Ownership and Export Performance: Firm‐Level Evidence from the Food Industry

Abstract

This article examines whether ownership arrangements between food firms and intermediaries improve the export performance of the former. We develop a theoretical model of trade with vertically‐linked industries whereby upstream manufacturers compete in export markets and may decide to acquire ownership stakes in an intermediary. The model highlights how more productive firms succeed in managing the double marginalization problem and in reducing the costs of exporting through forward acquisition. The predictions from the model are tested using firm‐level data on the French food industry. The results demonstrate that acquiring an intermediary lowers prices and distribution costs, and reveal that the benefits from forward acquisitions can be quite large. Conversely, we find that vertical ownership creates a market externality among manufacturers due to the reallocation of market shares from small firms to large firms, thereby forcing some low‐productivity firms to exit foreign markets.

Shareholding strategies for selling green products on online platforms in a two-echelon supply chain

“…Nevertheless, running the proposed model herein reveals that backward shareholding will increase the final price and thus hurt the sales volume. Regarding performance of the players, Concerning the performance of the players, Gaigné et al (2018) proved their benefits could be quite significant through applying forward acquisitions. In an N-to-One assembly system, Fu et al (2018) considered both upstream and downstream Stackelberg game, concluding that such a shareholding system enables the downstream firm to share the profit of the upper ones and the latter to gain needed resources, which in turn eventually benefits the whole supply chain.…”

Compétitivité internationale du secteur agroalimentaire français : c’est quoi le problème ?

“…Au-delà des variations des coûts des facteurs de production, la compétitivité-coût dépend également de l'évolution de la productivité. Différents travaux soulignent le rôle-clé de la productivité des firmes agroalimentaires dans leur réussite à l'exportation (Gaigné et al, 2017), en accord avec les nombreuses études empiriques (Crozet et Mayer, 2007). Or, contrairement au secteur agricole, on observe un essoufflement des gains de productivité dans les industries agroalimentaires au cours de ces vingt dernières années.…”

Supplier's investment in manufacturer's quality improvement with equity holding

“…Brito et al [5] find that when the products are homogeneous, equity holding by downstream firms in the upstream firm benefits the consumers. Gaigné et al [16] and Fu et al [14] study equity holding in a supply chain with multiple upstream firms and one downstream firm. Gaigné et al [16] show that equity holding by upstream firms in the downstream firm benefits the entire supply chain.…”

“…Gaigné et al [16] and Fu et al [14] study equity holding in a supply chain with multiple upstream firms and one downstream firm. Gaigné et al [16] show that equity holding by upstream firms in the downstream firm benefits the entire supply chain. Fu et al [14] show that the impact of equity holding by the downstream firm in upstream firms highly depends on power structures.…”