Understanding and Analyzing Competitive Dynamics by Arik Murat;Livingston Steven G.;

Author:Arik, Murat;Livingston, Steven G.;
Language: eng
Format: epub
Publisher: Lexington Books

At the heart of the input–output model is the flow of commodities from producers to final consumers. The total value of commodities produced is equal to total industry purchases, which comprise commodities, services, employment compensation, value added, and imports. The model itself is driven by final demand. The mechanism in the model captures linkages among industries by tracing all goods and services purchased by an industry to produce goods and services for final demand. This process of buying and selling stops at a certain point because of the outflows (leakages) from the region in the form of imports and value added. In addition to the IMPLAN database for the MTM region, we also utilize “industry by occupational matrices” from IMPLAN. Because these matrices are aligned with the IMPLAN sectoring scheme, they allow us to easily identify top occupations by given industrial clusters.

Model-Driven Regional Clusters

The methodology employed in this study combines Feser (2005) and Hill and Brennan (2000). In particular, the study comprises two stages: the first identifies industry clusters using IMPLAN input–output data; the second extends the first-stage study by identifying the driver industry within each homogeneous cluster.

If two industries, i and j, are in the same cluster, they must exhibit one of the following patterns: (1) they have similarities in their procurement pattern; (2) they have similarities in their selling pattern; or (3) one industry’s procurement pattern is very similar to other industries selling pattern.

The industries in a given cluster have a more significant input–output linkage with each other than with the industries outside the cluster. The initial attempt for the industry cluster study was made by Czamanski in the early 1970s. Czamanski (1974) started with a square inter-industry transaction matrix. Two ratios are calculated from the matrix:

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