Aggregating Capacity-Limiting Separable Inputs
The concept of separability is closely related to aggregation. Previous studies on separability are important mainly for theoretical contributions, not for empirical results. This paper provides a theoretical justification for using the maximum capacity of a subset of inputs as an aggregate index in empirical settings. The method is demonstrated with two examples, aggregating inputs within a firm and across firms.
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Volume (Year): 69 (2002)
Issue (Month): 2 (October)
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