Business networks, production chains and productivity: A theory of input-output architecture
This paper studies an analytically tractable model of the formation and evolution of chains of production. Over time, entrepreneurs accumulate techniques to produce their good using goods produced by other entrepreneurs and labor as inputs. The value of a technique depends on both the productivity embodied in the technique and the cost of the particular input; when producing, each entrepreneur selects the technique that delivers the best combination. The collection of known production techniques form a dynamic network of potential chains of production: the input-output architecture of the economy. Aggregate productivity depends on whether the lower cost firms are the important suppliers of inputs. When the share of intermediate goods in production is high, the lower cost firms are selected as suppliers more frequently. This raises aggregate productivity and also increases the concentration of sales of intermediate goods.
|Date of creation:||2011|
|Contact details of provider:|| Postal: P.O. Box 834, 230 South LaSalle Street, Chicago, Illinois 60690-0834|
Web page: http://www.chicagofed.org/
More information through EDIRC
|Order Information:|| Web: http://www.chicagofed.org/webpages/publications/print_publication_order_form.cfm Email: |
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Andrew T. Foerster & Pierre-Daniel G. Sarte & Mark W. Watson, 2011.
"Sectoral versus Aggregate Shocks: A Structural Factor Analysis of Industrial Production,"
Journal of Political Economy,
University of Chicago Press, vol. 119(1), pages 1-38.
- Pierre-Daniel Sarte & Mark Watson & Andrew Foerster, 2008. "Aggregate Shocks and the Variability of Industrial Production," 2008 Meeting Papers 224, Society for Economic Dynamics.
- Andrew T. Foerster & Pierre-Daniel G. Sarte & Mark W. Watson, 2008. "Sectoral vs. aggregate shocks : a structural factor analysis of industrial production," Working Paper 08-07, Federal Reserve Bank of Richmond.
- Andrew T. Foerster & Pierre-Daniel G. Sarte & Mark W. Watson, 2008. "Sectoral vs. Aggregate Shocks: A Structural Factor Analysis of Industrial Production," NBER Working Papers 14389, National Bureau of Economic Research, Inc.
- Thomas Chaney, 2014. "The Network Structure of International Trade," American Economic Review, American Economic Association, vol. 104(11), pages 3600-3634, November.
- Chaney, Thomas, 2011. "The Network Structure of International Trade," CEPR Discussion Papers 8240, C.E.P.R. Discussion Papers.
- Thomas Chaney, 2011. "The Network Structure of International Trade," NBER Working Papers 16753, National Bureau of Economic Research, Inc.
- Thomas Chaney, 2014. "The Network Structure of International Trade," Sciences Po publications info:hdl:2441/7an8r1ubqs9, Sciences Po.
- Kelly, M., 1996. "The Dynamics of Smithian growth," Papers 96/9, College Dublin, Department of Political Economy-.
- Morgan Kelly, 1997. "The dynamics of Smithian growth," Open Access publications 10197/521, School of Economics, University College Dublin.
- Morgan Kelly, 1997. "The Dynamics of Smithian Growth," The Quarterly Journal of Economics, Oxford University Press, vol. 112(3), pages 939-964.
- Daron Acemoglu & Asuman Ozdaglar & Alireza Tahbaz-Salehi, 2010. "Cascades in Networks and Aggregate Volatility," NBER Working Papers 16516, National Bureau of Economic Research, Inc. Full references (including those not matched with items on IDEAS)
When requesting a correction, please mention this item's handle: RePEc:fip:fedhwp:wp-2011-12. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Bernie Flores)
If references are entirely missing, you can add them using this form.