Measuring productivity in an imperfect world |
| |
| Authors: | Aklilu A Zegeye Larry Rosenblum |
| |
| Institution: | 1. Gore School of Business, Westminster College, 1840 South 1300 East, Salt Lake City, UT, USA;2. Merrick School of Business, University of Baltimore, 1420 North Charles Street, Baltimore, MD 21201, USA;3. Goizueta School of Business, Emory University, Atlanta, GA 30322, USA |
| |
| Abstract: | Most measures of multifactor productivity (MFP) assume constant returns to scale and perfect competition. Using a general aggregate production function together with duality theory and allowing for the possibilities of disequilibrium, markups and economies of scale, the study derives a more generalized MFP measure. The model was used to assess the economic performance in US manufacturing for the 1949 to 1988 period. The results suggest that scale and markups have substantial power in explaining MFP growth for all periods and that half of the measured MFP growth (as measured within the conventional framework) comes from biases due to scale economies, market power, and interaction effects. |
| |
| Keywords: | |
|
|
