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User Costs versus Waiting Services and Depreciation in a Model of Production

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  • Diewert W.Erwin

    () (Department of Economics, University of British Columbia, Vancouver, Canada V6T 1Z)

Abstract

The paper develops an extension of a one period model of production involving beginning and end of the period capital stocks along with output and input flows that is due to Hicks and Edwards and Bell. This generalized Austrian model of production takes into account that end of the period capital stocks result from: (i) purchases of new investment goods; (ii) internal construction of firm capital stock components and (iii) holdings of (depreciated) capital goods that were held by the firm at the beginning of the period. These different methods of creating end of period holdings of capital stocks generally have different resource requirements and hence the one period production possibilities set is more complex than the usual one. This general model of production is used to justify the decomposition of the Jorgensonian user cost of capital into separate waiting services and depreciation components.

Suggested Citation

  • Diewert W.Erwin, 2010. "User Costs versus Waiting Services and Depreciation in a Model of Production," Journal of Economics and Statistics (Jahrbuecher fuer Nationaloekonomie und Statistik), De Gruyter, vol. 230(6), pages 759-771, December.
  • Handle: RePEc:jns:jbstat:v:230:y:2010:i:6:p:759-771
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    References listed on IDEAS

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    3. Hart, Sergiu & Mas-Colell, Andreu, 1996. "Harsanyi Values of Large Economies: Nonequivalence to Competitive Equilibria," Games and Economic Behavior, Elsevier, pages 74-99.
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    5. Diewert, W E, 1974. "Intertemporal Consumer Theory and the Demand for Durables," Econometrica, Econometric Society, vol. 42(3), pages 497-516, May.
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    8. W. Erwin Diewert & Ann Marie Smith, 1994. "Productivity Measurement for a Distribution Firm," NBER Working Papers 4812, National Bureau of Economic Research, Inc.
    9. W. Erwin Diewert, 1980. "Aggregation Problems in the Measurement of Capital," NBER Chapters,in: The Measurement of Capital, pages 433-538 National Bureau of Economic Research, Inc.
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    11. Usher, Dan (ed.), 1980. "The Measurement of Capital," National Bureau of Economic Research Books, University of Chicago Press, edition 0, number 9780226843001.
    12. Jorgenson, Dale W, 1996. "Empirical Studies of Depreciation," Economic Inquiry, Western Economic Association International, vol. 34(1), pages 24-42, January.
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    Citations

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    Cited by:

    1. Diewert, W. Erwin & Fox, Kevin J., 2016. "Alternative User Costs, Rates of Return and TFP Growth Rates for the US Nonfinancial Corporate and Noncorporate Business Sectors: 1960-2014," Microeconomics.ca working papers erwin_diewert-2016-7, Vancouver School of Economics, revised 30 Jun 2016.
    2. W. Diewert, 2014. "US TFP growth and the contribution of changes in export and import prices to real income growth," Journal of Productivity Analysis, Springer, pages 19-39.
    3. W. Erwin Diewert & Kevin J. Fox, 2017. "Alternative User Costs, Productivity and Inequality in US Business Sectors," Discussion Papers 2017-14, School of Economics, The University of New South Wales.
    4. Diewert, W. Erwin, 2017. "Productivity Measurement in the Public Sector: Theory and Practice," Microeconomics.ca working papers erwin_diewert-2017-1, Vancouver School of Economics, revised 02 Feb 2017.
    5. , & Diewert, Erwin, 2014. "The Treatment of Financial Transactions in the SNA: A User Cost Approach," Economics working papers erwin_diewert-2014-8, Vancouver School of Economics, revised 20 Feb 2014.

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