We study a novel economic network  comprised of wire transfers (electronic payment transactions) among the universe of firms in Brazil (6.2 million firms). We construct a directed and weighted network in which vertices represent cities and edges connote pairwise economic dependence between cities. Each city (vertex) represents the collection of all firms within that city. Edge weights are modeled by the total amount of wire transfersthat arise due to business transactions between firms localized at different cities. The rationale is that the more they transact with each other, the more dependent they become in the economic sense. We find a high degree of economic integration among cities in the trade network, which is consistent with the high degree of specialization found across Brazilian cities. We are able to identify which cities have a dominant role in the entire supply chain process using centrality network measures. We find that the trade network has a disassortative mixing pattern, which is consistent with the power-law shape of the firm size distribution in Brazil. After the Brazilian recession in 2014, we find that the disassortativity becomes even stronger as a result of the death of many small firms and the consequent concentration of economic flows on large firms. Our results suggest that recessions have a large impact on the trade network with meaningful and heterogeneous economic consequences across municipalities  .
We study a novel economic network (supply chain) comprised of wire transfers (electronic payment transactions) among the universe of firms in Brazil (6.2 million firms). We construct a directed and weighted network in which vertices represent cities and edges connote pairwise economic dependence between cities. Cities (vertices) represent the collection of all firms in that location and links denote intercity wire transfers. We find a high degree of economic integration among cities in the trade network, which is consistent with the high degree of specialization found across Brazilian cities. We are able to identify which cities have a dominant role in the entire supply chain process using centrality network measures. We find that the trade network has a disassortative mixing pattern, which is consistent with the power-law shape of the firm size distribution in Brazil. After the Brazilian recession in 2014, we find that the disassortativity becomes even stronger as a result of the death of many small firms and the consequent concentration of economic flows on large firms. Our results suggest that recessions have a large impact on the trade network with meaningful and heterogeneous economic consequences across municipalities . We run econometric exercises and find that courts efficiency plays a dual role. From the customer perspective, it plays an important role in reducing contractual frictions as it increases economic transactions between different cities. From the supplier perspective, cities that are central suppliers to the supply chain seem to use courts inefficiency as a lawsuit barrier from their customers .
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(supply chain)
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Each city (vertex) represents
Cities (vertices) represent
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within that city. Edge weights are modeled by the total amount of wire transfersthat arise due to business transactions between firms localized at different cities. The rationale is that the more they transact with each other, the more dependent they become in the economic sense.
in that location and links denote intercity wire transfers.
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. We run econometric exercises and find that courts efficiency plays a dual role. From the customer perspective, it plays an important role in reducing contractual frictions as it increases economic transactions between different cities. From the supplier perspective, cities that are central suppliers to the supply chain seem to use courts inefficiency as a lawsuit barrier from their customers