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http://hdl.handle.net/10419/28145
  
Title:The strength of vertical linkages PDF Logo
Authors:Kranich, Jan
Issue Date:2006
Series/Report no.:University of Lüneburg working paper series in economics 20
Abstract: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 identified 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.
Subjects:New Economic Geography
Vertical Linkages
JEL:F12
F14
F17
Document Type:Working Paper
Appears in Collections:Working Paper Series in Economics, Leuphana Universität Lüneburg

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