Product Substitutability and Productivity Dispersion
Tremendous differences in producer productivity levels exist, even within narrowly defined industries. This paper explores the influence of product substitutability in an industry on this disparity. When consumers can easily switch between producers, inefficient (high-cost) producers cannot operate profitably. Thus high-substitutability industries should exhibit less productivity dispersion and have higher average productivity levels. I demonstrate this mechanism in a simple industry equilibrium model and test it empirically using producer-level data from 443 U.S. manufacturing industries. I find evidence that substitutability measured in several ways'is indeed negatively related to within-industry productivity dispersion and positively related to median productivity. © 2004 President and Fellows of Harvard College and the Massachusetts Institute of Technology.
Volume (Year): 86 (2004)
Issue (Month): 2 (May)
|Contact details of provider:|| Web page: http://mitpress.mit.edu/journals/|
|Order Information:||Web: http://mitpress.mit.edu/journal-home.tcl?issn=00346535|
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Chad Syverson, 2004.
"Market Structure and Productivity: A Concrete Example,"
Journal of Political Economy,
University of Chicago Press, vol. 112(6), pages 1181-1222, December.
- Chad Syverson, 2004. "Market Structure and Productivity: A Concrete Example," NBER Working Papers 10501, National Bureau of Economic Research, Inc.
- Chad Syverson, 2001. "Market Structure and Productivity: A Concrete Example," Working Papers 01-06, Center for Economic Studies, U.S. Census Bureau.
- F. Biesmans, 1977. "A Survey," Annals of Public and Cooperative Economics, Wiley Blackwell, vol. 48(1), pages 5-36, 01.
- Marcus Asplund & Volker Nocke, 2003. "Firm Turnover in Imperfectly Competitive Markets," PIER Working Paper Archive 03-010, Penn Institute for Economic Research, Department of Economics, University of Pennsylvania.
When requesting a correction, please mention this item's handle: RePEc:tpr:restat:v:86:y:2004:i:2:p:534-550. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Kristin Waites)
If references are entirely missing, you can add them using this form.