Page 35 - Special Topic Session (STS) - Volume 2

STS452 Yang C. et al.
In LMS model, China’s production activity is partitioned into three
parts: namely, large firms production (L), medium firms production (M),
and small firms production (S).

Denote, = [ ], = [ ] + [ ] , = [ ]

Define direct input coefficient = () , is diagonal matrix of
−1
̂

̂

̂
−1
output value , row vector of value-added ratio is = () , we then

have:
−1
= (1 − ) (1)

Table 1 China’s Non-Competitive Input-Output Table Capturing firm size
heterogeneity (LMS model)
Output Intermediate use Final use Total
Gross
Large Medium Small Domestic Exports Output
Firm Firm Firm Final
Input Demands
(L) (M) (S) (FD) (FE) (X)

Large

Firm (L)
Domestic Medium

Intermediate Firm (M)
Inputs (ZD)

Small

Firm (S)
Imported Intermediate

Inputs (ZN)
Value-added ′
′
′

(V)
Total Gross ′
′
′

Inputs (X)
Note: Table 1 gives a typical non-competitive I/O table which distinguishes
domestic inputs and imported inputs. The superscript L, M, S denotes products
from large-sized firms, medium-sized firms, and small-sized firms; ZD and ZN
denote domestic and imported intermediate inputs, respectively; FD and FE
denotes final demands vectors for domestic products and exported ones,
respectively; X and V denotes total output (input) and primary inputs vector,
respectively.

Then, value-added generated by export and final demands can be
calculated as:
−1
= = ( − ) (2)

= = ( − ) (3)
−1

Correspondingly, we can estimate the embodied CO2 emissions in
exports or final demands as follows:
−1
= ( − ) (4)

24 | I S I W S C 2 0 1 9