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Supply-Driven IO Quantity Model and Its Dual, Price Model

In: Rethinking Input-Output Analysis

Author

Listed:
  • Jan Oosterhaven

    (University of Groningen)

Abstract

The supply-driven IO quantity model is shown to be the mirror image of the standard IO model. In this Ghosh model, any change in the exogenous supply of primary inputs is passed on forwardly to purchasers that pass it on further with fixed intermediate and fixed final output coefficients. The Ghosh model assumes a single homogeneous input, which means that factories may work without labour. The Type II supply-driven model, additionally, has a supply-driven consumption function, which allows kitchen appliances to run without electricity. The dual of the Ghosh quantity model, the revenue-pull IO price model, simulates the backward passing on, under full competition, of any final output price change to the suppliers of intermediate inputs who pass them on further, to end up in changes in the endogenous prices of the primary inputs. Finally, the functioning of markets in all four basic IO models is compared, which shows that the price and quantity impacts in all four models are overestimated.

Suggested Citation

  • Jan Oosterhaven, 2022. "Supply-Driven IO Quantity Model and Its Dual, Price Model," Advances in Spatial Science, in: Rethinking Input-Output Analysis, edition 2, chapter 0, pages 87-104, Springer.
    • Handle: RePEc:spr:adspcp:978-3-031-05087-9_7
    DOI: 10.1007/978-3-031-05087-9_7
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