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The Identification of Up- and Downstream Industries using Input–Output Tables and a Firm-level Application to Minority Shareholdings

  • Olivia A. Bodnar , Achim Buchwald and John P. Weche EMAIL logo

Abstract

We present a method for identifying up- and downstream industries in inter-industry datasets via input–output tables. We apply this approach to aggregated European input–output data and present results on identified industry links and their sensitivity to threshold definitions. We furthermore test the time-consistency of the up- and downstream assignments based on input–output tables, and discuss the limitations of this method. Finally, the method is used to test anti-competitive effects of non-controlling minority shareholdings.

JEL Classification: C81; F14; F15; L22; L23

Appendix

A.1 Industry classification and indirect links

Table A.1:

NACE Rev. 2 Industry Classification.

2-digit CodeDescription
01Crop and animal production, hunting and related service activities
02Forestry and logging
03Fishing and aquaculture
05Mining of coal and lignite
06Extraction of crude petroleum and natural gas
07Mining of metal ores
08Other mining and quarrying
09Mining support service activities
10Manufacture of food products
11Manufacture of beverages
12Manufacture of tobacco products
13Manufacture of textiles
14Manufacture of wearing apparel
15Manufacture of leather and related products
16Manufacture of wood and of products of wood and cork, except furniture;
manufacture of articles of straw and plaiting materials
17Manufacture of paper and paper products
18Printing and reproduction of recorded media
19Manufacture of coke and refined petroleum products
20Manufacture of chemicals and chemical products
21Manufacture of basic pharmaceutical products and pharmaceutical preparations
22Manufacture of rubber and plastic products
23Manufacture of other non-metallic mineral products
24Manufacture of basic metals
25Manufacture of fabricated metal products, except machinery and equipment
26Manufacture of computer, electronic and optical products
27Manufacture of electrical equipment
28Manufacture of machinery and equipment n.e.c.
29Manufacture of motor vehicles, trailers and semi-trailers
30Manufacture of other transport equipment
31Manufacture of furniture
32Other manufacturing
33Repair and installation of machinery and equipment
35Electricity, gas, steam and air conditioning supply
36Water collection, treatment and supply
37Sewerage
38Waste collection, treatment and disposal activities; materials recovery
39Remediation activities and other waste management services
41Construction of buildings
42Civil engineering
43Specialised construction activities
45Wholesale and retail trade and repair of motor vehicles and motorcycles
46Wholesale trade, except of motor vehicles and motorcycles
47Retail trade, except of motor vehicles and motorcycles
49Land transport and transport via pipelines
50Water transport
51Air transport
52Warehousing and support activities for transportation
53Postal and courier activities
55Accommodation
56Food and beverage service activities
58Publishing activities
59Motion picture, video and television programme production, sound recording
and music publishing activities
60Programming and broadcasting activities
61Telecommunications
62Computer programming, consultancy and related activities
63Information service activities
64Financial service activities, except insurance and pension funding
65Insurance, reinsurance and pension funding, except compulsory social security
66Activities auxiliary to financial services and insurance activities
68Real estate activities
69Legal and accounting activities
70Activities of head offices; management consultancy activities
71Architectural and engineering activities; technical testing and analysis
72Scientific research and development
73Advertising and market research
74Other professional, scientific and technical activities
75Veterinary activities
77Rental and leasing activities
78Employment activities
79Travel agency, tour operator and other reservation service and related activities
80Security and investigation activities
81Services to buildings and landscape activities
82Office administrative, office support and other business support activities
86Human health activities
87Residential care activities
88Social work activities without accommodation
94Activities of membership organisations
95Repair of computers and personal and household goods
96Other personal service activities
Table A.2:

Summary statistics of indirect up- and downstream assignments.

CutoffNumber of vertical linksNumber of vertically linked industries
(Percentage of all possible links(Percentage of all industries in parentheses)
in parentheses)c
UpstreamDownstreamBoth
3%1,56527052
(0.32)(34.18)(0.00)(65.82)
5%55237137
(0.11)(46.84)(1.27)(46.84)
10%7229128
(0.01)(36.71)(15.19)(10.13)
  1. Note: The sample covers 493,039 triangular relationships between 79 different industries.

Table A.3:

Summary statistics for the firm dataset (2006–2013).

Transaction variables
Shareholder-levelTarget-level
No. of obs.%No. of obs.%
Upstream transactiont1,9450.041,1590.03
Downstream transactiont1,3870.031,1750.03
Horizontal transactiont4,6810.102,7480.06
Vertical transactiont12,0210.2710,6580.24
Considering secondary industries
Upstream transactiont2,7030.061,7100.04
Downstream transactiont2,2070.051,8990.04
Horizontal transactiont13,3020.3014,8390.33
Other variables
MeanStd.dev.Min.Max.
Lerner index0.960.080.000021
Turnover (mill. EUR)20.77348.470.001163,000
Age (years)19.3915.681896
Group member0.350.4801
  1. Note: The number of firm-year observations for all variables is 4,467,488.

A.2 Data preparation

For the financial data, the Orbis version as of June 2015 was used, and all European firms with a turnover of at least 2 million EUR in at least one year during the observation period and an available unconsolidated account were extracted for 2006–2013. The sample covers firms from NACE 2-digit industries 01 to 82 (without financial services) and EU-28 countries without Cyprus and Malta. In contrast to the Monopolies Commission, we conduct our analysis for a sample including firms from Germany, Austria, and the UK.

Historic shareholder information stems from the Orbis company ownership module and was merged to firm IDs both on shareholder and on target level. Therefore, at the target firm level only capital links can be considered whose shareholders are located within the EU-28 countries. Shareholdings of institutional investors and natural persons were not considered. A detected minority shareholding in in yeart was also assumed to be existent in yeart+n, when shareholder information is missing in these years, but the firm was active in terms of reported turnover.

The Lerner index variable was restricted to values between zero and one, whereas all values below zero were treated as zero values. Particularly with regard to panel analyses, a careful preparation of the Orbis database is needed. Therefore, observations with asymmetric observations–-which is observations with non-missing information for the outcome variable, but missing information for control variables or vice versa–-were excluded. Furthermore, all firms with inconsistent missing values were dropped from the unbalanced sample. Inconsistency here refers to cases in which missing values occur in between reported figures and thus are unlikely to be caused by a firm’s inactivity. Missing information can also occur in years in which firms had not been established or already had exited the market: these observations remain in our unbalanced sample. Moreover, only firms with at least three consecutive observations were kept in the sample.

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Article note

The findings, interpretations, and conclusions expressed in this paper are entirely those of the authors and should not be attributed in any manner to their employers or affiliations.


Received: 2016-10-11
Revised: 2017-04-30
Accepted: 2017-11-13
Published Online: 2017-12-05
Published in Print: 2017-12-20

© 2017 Oldenbourg Wissenschaftsverlag GmbH, Published by De Gruyter Oldenbourg, Berlin/Boston

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