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Decomposition of Technological Change and Factor Bias in Indian Power Sector: An Unbalanced Panel Data Approach

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  • Anjana Bhattacharyya
  • Arunava Bhattacharyya
  • Krishna Mitra

Abstract

Technological change and factor bias in the Indian power sector are analyzed using a translog cost function. Various components of technological progress and factor bias are identified and estimated, using a 21 year unbalanced panel data of Indian states and union territories. Heterogeneity across states is incorporated in the model using a variance component model. Appropriate corrections are made for unbalanced panel data. Empirical results show that the annual average rate of technological progress has been 2.4% for the country as a whole. Accumulation of knowledge and increasing scale are found to be the major factors contributing to technological progress. In contrast, the effects of factor price changes and fixed capital accumulation on technological progress have been unfavorable. Pure factor bias measure indicate saving in the use of fuel and labor, and increased use of materials. Tests are performed to check the curvature properties of the underlying technology. Copyright Kluwer Academic Publishers 1997

Suggested Citation

  • Anjana Bhattacharyya & Arunava Bhattacharyya & Krishna Mitra, 1997. "Decomposition of Technological Change and Factor Bias in Indian Power Sector: An Unbalanced Panel Data Approach," Journal of Productivity Analysis, Springer, vol. 8(1), pages 35-52, March.
  • Handle: RePEc:kap:jproda:v:8:y:1997:i:1:p:35-52
    DOI: 10.1023/A:1007720330754
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    References listed on IDEAS

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    1. Heshmati, Almas, 1994. "Estimating random effects production function models with selectivity bias: an application to Swedish crop producers," Agricultural Economics, Blackwell, vol. 11(2-3), pages 171-189, December.
    2. Wylie, Peter J, 1990. "Scale-Biased Technological Development in Canada's Industrialization, 1990-1929," The Review of Economics and Statistics, MIT Press, vol. 72(2), pages 219-227, May.
    3. Reghubendra, J. & Murty, M.N. & Paul, S. & Rao, B.B., 1992. "An Analysis of Technological Change, Factor Substitution and Economies of Scale in Manufacturing Industries in India," Papers e9214, Western Sydney - School of Business And Technology.
    4. Douglas W. Caves & Laurits R. Christensen & Michael W. Tretheway, 1984. "Economies of Density versus Economies of Scale: Why Trunk and Local Service Airline Costs Differ," RAND Journal of Economics, The RAND Corporation, vol. 15(4), pages 471-489, Winter.
    5. Sosin, Kim H & Fairchild, Loretta G, 1984. "Nonhomotheticity and Technological Bias in Production," The Review of Economics and Statistics, MIT Press, vol. 66(1), pages 44-50, February.
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    Cited by:

    1. Alfons Palangkaraya & Andreas Stierwald & Jongsay Yong, 2009. "Is Firm Productivity Related to Size and Age? The Case of Large Australian Firms," Journal of Industry, Competition and Trade, Springer, vol. 9(2), pages 167-195, June.

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