Construction spending patterns and retail margins
I'm working on an analysis of construction projects, and I'm having trouble conceptualizing how IMPLAN handles the materials purchased at retail stores in terms of the retail margins. Suppose for example that someone is doing a $1 million construction project, and $500k of that will be spent on materials and the rest on labor. I want to use the built-in spending pattern for single-family housing for the materials portion of the analysis. My understanding is that the spending pattern allocates the retail margin to retail services, which is basically the margin the store takes to make all of the other items available for purchase. But the remainder would be allocated to the sectors that make the materials the construction firm would need to build the project. In other words, in my $500k hypothetical example, if there is a retail margin of 20%, $100k would go to retail services, but the remaining $400k would be allocated to the sectors that produce the wood, concrete, etc., that are used in the construction of the houses. Please let me know if I'm thinking about this correctly.
Hello, While the application of Margins is not as straight-forward as your example, since not all items used on a construction site are assumed to be purchased through retail (some are assumed purchased through wholesale and some directly from producers). You have the basic understanding of how retail and wholesale purchases are handled. This [url= http://www.implan.com/index.php?option=com_content&view=article&id=203&Itemid=1797]article[/url] describes the application of the Value Chain in IMPLAN when the specific item being purchased is known, which is the case in the construction spending patterns built into IMPLAN. The article describes how and why to manually set Margins for use with Industry Change Activities when you are modeling a purchase of say gasoline made my residents in your region. However, in your case the same principles apply, but the splitting of the Value Chain is already done in the spending patterns. Please let us know if you have any additional questions.
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