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Abstract

In this paper an approach that can be used to determine the distribution of a productivity gain on an industry is detailed. In particular, the model developed in this paper extends earlier evaluations by emphasising the crucial role of substitution between inputs across different participants in the supply chain. Crucial to any analysis of an industry are the estimates of the elasticity's of derived demand at each stage and how it changes, as the product is further refined. The wool industry is used to illustrate the effects of an innovation across sectors.

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