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Identification of heterogeneous elasticities in gross-output production functions

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  • Li, Tong
  • Sasaki, Yuya

Abstract

This paper presents the identification of heterogeneous elasticities in gross-output production functions with non-separable unobserved productivity. We propose that the ex-ante flexible input cost shares identify the heterogeneous output elasticities with respect to flexible inputs for each firm. Applying the proposed method to a panel of firms in the food production industry in Chile, we find that the extent of heterogeneity in the output elasticities with respect to intermediate inputs has significantly declined from 1985 to 1995, with its distribution tending to concentrate toward zero as time progresses.

Suggested Citation

  • Li, Tong & Sasaki, Yuya, 2024. "Identification of heterogeneous elasticities in gross-output production functions," Journal of Econometrics, Elsevier, vol. 238(2).
    • Handle: RePEc:eee:econom:v:238:y:2024:i:2:s0304407623003536
    DOI: 10.1016/j.jeconom.2023.105637
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    More about this item

    Keywords

    Gross-output production function; Heterogeneous elasticity; Identification;
    All these keywords.

    JEL classification:

    • C20 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - General
    • C50 - Mathematical and Quantitative Methods - - Econometric Modeling - - - General
    • L20 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - General

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