The Strength of Vertical Linkages

Jan Kranich

No 20, Working Paper Series in Economics from University of Lüneburg, Institute of Economics

Abstract: This paper discusses the interdenpendencies 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.

Keywords: New Economic Geography; Vertical Linkages (search for similar items in EconPapers)
JEL-codes: F12 F14 F17 (search for similar items in EconPapers)
Pages: 38 pages
Date: 2006-07-19
New Economics Papers: this item is included in nep-com and nep-int
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
https://www.leuphana.de/fileadmin/user_upload/Fors ... pdf/wp_20_Upload.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:lue:wpaper:20

Access Statistics for this paper

More papers in Working Paper Series in Economics from University of Lüneburg, Institute of Economics
Bibliographic data for series maintained by Joachim Wagner ( this e-mail address is bad, please contact ).