A NEW SECTORAL TAXONOMY BASED ON PECUNIARY KNOWLEDGE EXTERNALITIES: KNOWLEDGE INTERACTIONS IN A VERTICALLY INTEGRATED SYSTEM

The paper presents a new sectoral taxonomy that focuses on the existence of non-negligible external effects that derive from user–producer knowledge interactions. These are coupled with intermediate goods transactions, in a system of vertically integrated manufacturing and services sectors. These externalities, the so-called pecuniary knowledge externalities, are the main source of changing technological conditions experienced by downstream producers. A distinguishing feature of the taxonomy lies in its derivation from a particularly dynamic context of changing production functions. The taxonomy is empirically derived, examining effects generated by technological knowledge in a system of intermediate goods transactions and taking into account peculiar characteristics of sectors in European economies. The results allow for a classification of sectors in five groups. An analysis of these classes confirms previous evidence that technological characteristics of sectors across classes differ.