Heterogeneity in Returns to Scale: A Random Coefficient Analysis with Unbalanced Panel Data
AbstractThis paper analyses the importance of scale economies by means of unbalanced plant-level panel data from three Norwegian manufacturing industries. Focus is on heterogeneous technologies, and unlike most previous work on micro data, the model description includes heterogeneity in both the scale properties (the slope coefficients) and the intercept term, represented by random coefficients in the production function. Three (nested) functional forms are investigated: the Translog, an extended Cobb-Douglas, and the strict Cobb-Douglas. Although constant or weakly increasing returns to scale is found for the average plant, the results reveal considerable variation across plants. Variations in both input and scale elasticities are to a larger extent due to randomness of the production function parameters than to systematic differences in the input mix.
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Bibliographic InfoPaper provided by Research Department of Statistics Norway in its series Discussion Papers with number 292.
Date of creation: Dec 2000
Date of revision:
Panel Data. Economies of Scale. Heterogeneity. Random Coefficients;
Other versions of this item:
- Erik Biørn & Kjersti-Gro Lindquist & Terje Skjerpen, 2002. "Heterogeneity in Returns to Scale: A Random Coefficient Analysis with Unbalanced Panel Data," Journal of Productivity Analysis, Springer, vol. 18(1), pages 39-57, July.
- C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
- D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
- L61 - Industrial Organization - - Industry Studies: Manufacturing - - - Metals and Metal Products; Cement; Glass; Ceramics
- L65 - Industrial Organization - - Industry Studies: Manufacturing - - - Chemicals; Rubber; Drugs; Biotechnology
- L73 - Industrial Organization - - Industry Studies: Primary Products and Construction - - - Forest Products
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