Localized Competition and the Aggregation of Plant Level Increasing Returns: Blast Furnaces 1929-1935
AbstractA recent empirical literature has shaken economists' confidence in the value of aggregate (industry-level) data to illuminate production relationships. But the statistical finding 'you can't aggregate,' however well documented, is not an economic explanation. Plant-level relationships do aggregate in Depression-era blast furnace operations despite the presence of very substantial interplant heterogeneity, the most common economic cause of nonaggregability. The economic explanation of this lies in poor short-run substitutability of one plant's output for another's. Substitutability determines the importance of composition effects in understanding aggregate time series, constrains the potential cleansing effects of recessions, and therefore influences industry evolution quite broadly. Copyright 1996 by University of Chicago Press.
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Bibliographic InfoPaper provided by Columbia - Graduate School of Business in its series Papers with number 93-10a.
Length: 43 pages
Date of creation: 1993
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Postal: U.S.A.; COLUMBIA UNIVERSITY, GRADUATE SCHOOL OF BUSINESS, PAINE WEBBER , New York, NY 10027 U.S.A
Phone: (212) 854-5553
Web page: http://www.columbia.edu/cu/business/
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productivity ; economic history;
Other versions of this item:
- Bertin, Amy L & Bresnahan, Timothy F & Raff, Daniel M G, 1996. "Localized Competition and the Aggregation of Plant-Level Increasing Returns: Blast Furnaces, 1929-1935," Journal of Political Economy, University of Chicago Press, vol. 104(2), pages 241-66, April.
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- Maliranta, Mika, 2001. "Productivity Growth and Micro-level Restructuring. Finnish experiences during the turbulent decades," Discussion Papers 757, The Research Institute of the Finnish Economy.
- Uchida, Hirofumi & Miyakawa, Daisuke & Hosono, Kaoru & Ono, Arito & Uchino, Taisuke & Uesugi, Iichiro, 2013. "Natural Disaster and Natural Selection," Working Paper Series 25, Center for Interfirm Network, Institute of Economic Research, Hitotsubashi University.
- Hiroshi Ohashi & Tsuyoshi Nakamura, 2005. "Technology Adoption, Learning by Doing, and Productivity: A Study from Steel Refining Furnaces," 2005 Meeting Papers 28, Society for Economic Dynamics.
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