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The Strength of Vertical Linkages

  • This paper discusses the interdependencies that exist between vertically-linked industries in the (Spence-)Dixit-Stiglitz model of monopolistic competition. The main objective is to develop a concept for quantifying the magnitude of sectoral coherence in models of the New Economic Geography. It is motivated by the suggestion, by Venables (1996), that 'strategic industries' be identi®ed in terms of their agglomeration potential. Using a partial-analytic approach, we focus on inter-industrial relations in a closed economy to draw conclusions regarding international trade. We ascertain that two factors have an impact upon the strength of industrial linkages: 1) the monopolistic scope of intermediate suppliers, in terms of (technical) substitution elasticity; and the share in downstream costs for intermediates. Within a simulation study, this paper applies this new theoretical concept to eight basic industries across ten European countries.

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Metadaten
Author:Jan Kranich
URL: https://pub-data.leuphana.de/frontdoor/index/index/docId/428
Document Type:ResearchPaper
Language:English
Year of Completion:2006
Date of Publication (online):2006/08/21
Release Date:2006/08/21
Tag:New Economic Geography; Vertical Linkages
GND Keyword:Geographie; New Economy
Institutes:Universität / Frühere Fachbereiche
Dewey Decimal Classification:3 Sozialwissenschaften / 33 Wirtschaft / 330 Wirtschaft