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Vertical Industry Linkages: Sources of Productivity Gains and Cumulative Causation?

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  • Frode Steen

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Abstract

In this paper we analyse vertical industry linkages, and the extent to which these work as channels for externalities. First, we test for activity-based externalities stemming from output growth and output level in vertically linked industries. Second, we aim at revealing the importance of a large home market for upstream industries. Eventually, by comparing results on localized inter-industry externalities and on the impact of local sales, we try to identify to what extent the geographical agglomeration of an industry is self-reinforcing. A number of Norwegian maritime transport and services sectors are analysed. The results are promising in the sense that the model distinguishes empirically between different sources of externalities, and unveils which vertical linkages that give rise to endogenous agglomeration.
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Suggested Citation

  • Frode Steen, 2002. "Vertical Industry Linkages: Sources of Productivity Gains and Cumulative Causation?," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 21(1), pages 3-20, August.
  • Handle: RePEc:kap:revind:v:21:y:2002:i:1:p:3-20
    DOI: 10.1023/A:1016014320951
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    References listed on IDEAS

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    Cited by:

    1. N. Domeque Claver & C. Fillat Castejón & F. Sanz Gracia, 2012. "External economies as a mechanism of agglomeration in EU manufacturing," Applied Economics, Taylor & Francis Journals, vol. 44(34), pages 4421-4438, December.
    2. Holger Görg & Aoife Hanley, 2004. "Does Outsourcing Increase Profitability?," The Economic and Social Review, Economic and Social Studies, vol. 35(3), pages 267-288.

    More about this item

    Keywords

    External economies of scale; industrial agglomeration; productivity growth;

    JEL classification:

    • L80 - Industrial Organization - - Industry Studies: Services - - - General
    • O40 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General
    • R10 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - General

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