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.
Author: | Jan KranichGND |
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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 |