SECTORAL MARKET POWER IN GLOBAL PRODUCTION: A THEORETICAL AND OBSERVATIONAL STUDY
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Volume
25
DOI
10.1142/S0219525922400057
Journal
Advances in Complex Systems
Issue
ISSN
0219-5259
Metadata
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In a globalized world, the distribution of value-added across firms depends on a number of factors that vary across space. A key factor is related to the different types of competition on the multilayer structure of production, which are characterized by different types of (market) power. In this paper, we first argue that PageRank centrality is able to capture sectoral market power within the complex structure of global production. We then study the empirical properties of this market power measure and demonstrate a power-law relationship between sectoral PageRank centrality and relative sectoral profits. This power-law relationship has (international) political economy implications as it demonstrates the high incentives of sectors to become more central to increase their relative profits.