Production chains determine the degree of specialization. If any economists out there need a model for this affect, there is one. Shannon Channel Theory.
Remember our basic QM hypothesis, these production chains are a fixed precision approximation of the hydraulic model. These chains can also be considered a sequence of Hicks partial equilibria in space and time. His chains have a rank of k, an original producer, and k-1 intermediate producer and a household consumption, though he does not model the household.
In reality, the production chains are typically 4-8 stages long. This paper does not make our essential assumption, that at equilibrium, all links have equal failure probability, this is the fixed uncertainty value. Having constant uncertainty among all agents in the chain is what makes it possible to build long chains, creating a constant probability of link failure among links.
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