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Productivity Growth and Efficiency under Leontief Technology: An Application to US Steam-Electric Power Generation Utilities

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Author Info
Margarita Genius () (Department of Economics, University of Crete, Greece)
Spyro Stefanou (Pennsylvania State University)
Vangelis Tzouvelekas () (Department of Economics, University of Crete, Greece)

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Abstract

A 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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Paper provided by University of Crete, Department of Economics in its series Working Papers with number 0913.

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Date of creation: 29 Jul 2009
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Handle: RePEc:crt:wpaper:0913

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This page was last updated on 2009-11-20.

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