Another Look at the Network Boundaries of American Markets

Measuring transactions as proportional variables rather than as marginal variables produces important differences in our images of economic networks. Market boundaries defined by proportional transactions emphasize the differences among specialized markets (production markets with a single principal supplier or consumer market). Boundaries defined by marginal transaction pattern with multiple supplier and consumer markets). The results reported here with marginal measures of transaction strength offer a substantively richer map of market boundaries than the result Burt reported with proportional measures. These findings promise to guide organizational research by offering clearer distinctions among the market environments in which organizations operate. Proportional transaction measures are well suited to their traditional use in economic input-output models tracing the flow of resources through a network. Marginal transactions are the more useful measure for sociological studies of market boundaries for organizational analysis, more clearly revealing variation in the resource-flow patterns that define structurally equivalent (substituable) production activities as a market.