Incoprea Theory
Vol. XXIX · 109

Theory 55/New analysis/Trade

Concentration Predicts Propagation

The claim

Supply shock propagation is predicted by input concentration better than by trade volume.

01Mechanism

Substitutability determines whether a shock passes through; volume does not.

02Prediction

Propagation should track concentration.

03Refutation

Propagation tracking volume would remove substitutability.