Communication Networks in Intermediate Markets

Most commodities move from points of production through successive stages of processing or manufacture and further stages of intermediate distribution before reaching points of final purchase. The final value of a commodity, in fact, is often analyzed by observing the amounts of labor and capital services that are added to it at each of these stages by the firm which owns it at each stage.

The setting of the problem is this. Successive stages of dealing in a commodity are in general required on account of any of the following considerations: a) an activity may need to be undertaken at a different scale—i.e., plant size—than that at which a preceding or a succeeding activity needs to be conducted; b) changes in the combinations of commodities may be required from one stage to another; or c) information and contacts need to be mobilized in order to connect disparate groups of actors in the complex of activities.