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Fixed Cost, Imperfect Competition and Bias in Technology Measurement: Japan and The United States

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  • Kiyohiko G. Nishimura
  • Masato Shirai
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    Abstract

    In many industries, competition is far from perfect and managerial efficiency (or a fixed cost) varies among firms. However, traditional measurement of technological progress assumes perfect competition and no fixed cost. This paper incorporates these two factors in the technological-progress measurement and investigates the biases caused by their omission. We show that if capital growth exceeds non-capital-input growth and that firms earn a positive pure profit, then traditional measurement underestimates the true technological progress. We apply this methodology to Japanese and US industries, and find that imperfect competition and managerial efficiency are important. However, the magnitude of the bias is not large ... Dans de nombreuses industries, la concurrence est loin d'être parfaite, et l'efficience du management (ou de charge fixe) varie selon les entreprises. Cependant, les mesures traditionnelles du progrès technologique impliquent une concurrence parfaite et pas de charge fixe. Ce document incorpore ces deux facteurs dans les mesures du progrès technologique et recherche les distortions causées par leurs omissions. On démontre que, si la croissance du capital est supérieure à celle des autres facteurs, et si les entreprises obtiennent un pur profit, les mesures traditionnelles sous-estiment alors les vrais progrès technologiques. On applique cette méthodologie aux industries japonaises et américaines, et on définit l'importance des imperfections à la concurrence et l'efficience du management. Cependant, l'ampleur des distortions n'est pas énorme ...

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    File URL: http://dx.doi.org/10.1787/260256735077
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    Bibliographic Info

    Paper provided by OECD Publishing in its series OECD Economics Department Working Papers with number 273.

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    Date of creation: 21 Dec 2000
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    Handle: RePEc:oec:ecoaaa:273-en

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    Related research

    Keywords: technological progress; imperfect competition; fixed cost; managerial efficiency; Japanese and US Industries; progrès technologique; compétition imparfaite; charge fixe; efficience du management; industries japonaises et américaines;

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    Cited by:
    1. Alan J. Auerbach & Maurice Obstfeld, 2003. "The Case for Open-Market Purchases in a Liquidity Trap," NBER Working Papers 9814, National Bureau of Economic Research, Inc.
    2. Emi Nakamura & Masao Nakamura (presenter) & Takanobu Nakajima, 2004. "Measuring Firms’ R&D Effects on Technical Progress: Japan in the 199," Econometric Society 2004 Far Eastern Meetings 414, Econometric Society.

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