Productivity Growth and Efficiency under Leontief Technology: An Application to US Steam-Electric Power Generation Utilities
AbstractA theoretical framework is developed for decomposing partial factor productivity and measuring technical inefficiency when the underlying technology is characterized by factor non-substitution. With Farrell's (1957) radial index of technical inefficiency being inappropriate in this case, Russell's (1985; 1987) non-radial indices are adapted to measure technical inefficiency in a Leontief model. A system of factor demand equations with a regime specific technical inefficiency term is proposed and estimated allowing for dependence across inputs using a copula approach. Then the paper presents a complete decomposition of partial factor productivity changes using a dataset of U.S. steam-power electric generation utilities.
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Bibliographic InfoPaper provided by University of Crete, Department of Economics in its series Working Papers with number 0913.
Date of creation: 29 Jul 2009
Date of revision:
This paper has been announced in the following NEP Reports:
- NEP-ALL-2009-09-26 (All new papers)
- NEP-EFF-2009-09-26 (Efficiency & Productivity)
- NEP-ENE-2009-09-26 (Energy Economics)
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