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Production factor returns: the role of factor utilisation

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Author Info

  • Cette, G.
  • Dromel, N.
  • Lecat, R.
  • Paret, A-C.

Abstract

Short-term increasing returns to production factors are usually found in empirical studies. We argue they can be due to omitted variables, particularly the intensity of factor utilisation. Thanks to original French firm-level data (1992-2008), we show how increasing returns to scale disappear when working time, capacity utilisation rate and mainly capital operating time are introduced in the production function.

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File URL: http://www.banque-france.fr/uploads/tx_bdfdocumentstravail/DT317.pdf
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Bibliographic Info

Paper provided by Banque de France in its series Working papers with number 317.

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Length: 22 pages
Date of creation: 2011
Date of revision:
Handle: RePEc:bfr:banfra:317

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Postal: Banque de France 31 Rue Croix des Petits Champs LABOLOG - 49-1404 75049 PARIS
Web page: http://www.banque-france.fr/
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Keywords: Production function; productivity; factor returns.;

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Cited by:
  1. Francesco Daveri & Rèmy Lecat & Maria Laura Parisi, 2013. "Service deregulation, competition and the performance of French and Italian firms," Working Papers 3, Department of the Treasury, Ministry of the Economy and of Finance.

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