Working PaperFirst publicationPublished version DOI: 10.48548/pubdata-1213

The Strength of Vertical Linkages

Preview & Downloads

Chronological data

Date of first publication2006-08-21
Date of publication in PubData 2024-08-23

Language of the resource

English

Related external resources

Part of ISSN: 1860-5508
Working paper series in economics

Related PubData resources

Publisher

Other contributors

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 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.

Keywords

Vertical Linkages; Geographie; New Economy

Number of the series contribution

20

More information

DDC

330 :: Wirtschaft

Creation Context

Research