Agglomeration, vertical specialization, and the strength of industrial linkages

摘要

Referring to the seminal model of Venables, this paper aims at quantifying the degree of vertical specialization in models of the new economic geography. The analysis is made in two steps. First, the paper develops a measuring concept for the strength of forward and backward linkages. As a main finding, the associated values only depend on the substitution elasticity between intermediate inputs as well as the corresponding share in downstream costs. In the second step, the Venables model is alternatively solved in order to determine the domain of vertical specialization and investigates its properties with respect to the strength of vertical linkages.