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Externalities, Cross-Sectoral Spillovers and Productivity Growth

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  • Ernesto Felli
  • Giovanni Tria

Abstract

We provide an interpretation of the productivity dynamics in the manufacturing sector based on the idea of the thick market externality à la Diamond. An econometric model has been estimated which allows to disentangle the long run effects of these trading externalities from those of internal economies of scale and of aggregate industry-level economies. The results obtained—based on a cointegrated system of non-linear-error-correction equations—confirm the hypothesis that the trading externality matters. Moreover, our findings point out that the emphasis generally posited both on internal and external economies of scale is not justified. Copyright Kluwer Academic Publishers 1997

Suggested Citation

  • Ernesto Felli & Giovanni Tria, 1997. "Externalities, Cross-Sectoral Spillovers and Productivity Growth," Open Economies Review, Springer, vol. 8(2), pages 171-188, April.
    • Handle: RePEc:kap:openec:v:8:y:1997:i:2:p:171-188
    DOI: 10.1023/A:1008289032417
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    References listed on IDEAS

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