Abstract
We describe an efficient method for estimating enterprise input-output tables for cases when only information on marginal totals is available. In order to estimate the production structure of enterprises, we utilize engineering knowledge to construct a qualitative prior containing 1 wherever an output may require an input, and 0 otherwise. This qualitative prior is then scaled by the total enterprise turnover, and subsequently reconciled using the RAS method in order to meet accounting rules. We demonstrate the usefulness of this method in an application to dairy product manufacturing in New Zealand, where we estimate the input-output tables for 22 production sites. Our analysis is carried out in units of mass, and hence the accounting rules are mass balance requirements.JEL Classification:Q560, C650, L660.
Highlights
Perhaps one of the unconventional uses of input-output analysis is its application to processes and networks within firms
The enterprise input-output matrix A∗ for the New Zealand dairy manufacturing system is reasonably sparse (Figure 1, left plot). This sparsity is pre-determined by the non-zero entries in the qualitative prior, because the zero entries are preserved during RAS balancing
The input of nitric acid into whole milk powder fluctuates between 0.002% and 0.05% of milk powder mass, but the input of raw milk solids into various intermediate and final dairy products ranges only between 5% and 10% of product mass
Summary
Perhaps one of the unconventional uses of input-output analysis is its application to processes and networks within firms. Perhaps the most comprehensive and at the same time pioneering work is that of Polenske (1997), who demonstrated the usefulness of an enterprise input-output model that is embedded in the nested system of regional and national input-output tables. A number of interesting enterprise input-output models and their applications have been published worldwide (Correa and Craft 1999; Marangoni and Fezzi 2002; Li et al 2008; Lenzen et al 2010a), notably by Albino and colleagues (Albino et al 2003; Albino and Kühtz 2004). Polenske’s basic idea was taken up again in recent input-output-based hybrid lifecycle approaches, where a so-called foreground system containing interdependent production processes is embedded in a national input-output table (Heijungs and Suh 2002; Suh 2004)
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