Malmquist and TÃ¶rnqvist Productivity Indexes: Returns to Scale and Technical Progress with Imperfect Competition
AbstractCaves, Christensen and Diewert proposed a method for estimating a theoretical productivity index for a firm using TÃ¶rnqvist input and output indexes, augmented by exogenous estimates of local returns to scale. However, in order to implement their method, they assumed that the firm maximized revenue in each period, conditional on the observed input vector in each period, taking output prices as fixed. This assumption is not warranted when there are increasing returns to scale. Thus in the present paper, it is assumed that the firm solves a monopolistic profit maximization problem when there are increasing returns to scale and the results of Caves, Christensen and Diewert are modified in accordance with this assumption.
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Bibliographic InfoPaper provided by Vancouver School of Economics in its series Economics working papers with number erwin_diewert-2010-5.
Length: 24 pages
Date of creation: 17 Feb 2010
Date of revision: 13 Jul 2010
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Web page: http://www.economics.ubc.ca/
Productivity; index numbers; Malmquist indexes; TÃ¶rnqvist indexes; returns to scale; non-competitive behavior; flexible functional forms.;
Find related papers by JEL classification:
- C43 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: Special Topics - - - Index Numbers and Aggregation
- D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
- E23 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Production
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