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Decomposing Productivity Growth in the U.S. Computer Industry

  • Chun, H.
  • Nadiri, M.I.

In this paper, we examine the sources of the productivity growth in the U.S. computer industry from 1978 to 1999. We estimate a joint production model of output quantity and quality that distinguishes two types of technological changes: process and product innovations. Based on the estimation results, we decompose total factor productivity (TFP) growth rate into the contributions of process and product innovations and scale economies. The results show that product innovation associated with better quality accounts for about 30 percent of the TFP growth in the computer industry. Furthermore, we find that the TFP acceleration in the computer industry in the late 1990s is mainly derived from a rapid increase in product innovation.

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File URL: http://econ.as.nyu.edu/docs/IO/9377/RR02-04.PDF
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Paper provided by C.V. Starr Center for Applied Economics, New York University in its series Working Papers with number 02-04.

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Length: 37 pages
Date of creation: 2002
Date of revision:
Handle: RePEc:cvs:starer:02-04
Contact details of provider: Postal: C.V. Starr Center, Department of Economics, New York University, 19 W. 4th Street, 6th Floor, New York, NY 10012
Phone: (212) 998-8936
Fax: (212) 995-3932
Web page: http://econ.as.nyu.edu/object/econ.cvstarr.html
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  1. Rosen, Sherwin, 1974. "Hedonic Prices and Implicit Markets: Product Differentiation in Pure Competition," Journal of Political Economy, University of Chicago Press, vol. 82(1), pages 34-55, Jan.-Feb..
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  9. Gort, Michael & Klepper, Steven, 1982. "Time Paths in the Diffusion of Product Innovations," Economic Journal, Royal Economic Society, vol. 92(367), pages 630-53, September.
  10. repec:ucn:oapubs:10197/204 is not listed on IDEAS
  11. Stavins, Joanna, 1995. "Model Entry and Exit in a Differentiated-Product Industry: The Personal Computer Market," The Review of Economics and Statistics, MIT Press, vol. 77(4), pages 571-84, November.
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  16. Klepper, Steven, 1996. "Entry, Exit, Growth, and Innovation over the Product Life Cycle," American Economic Review, American Economic Association, vol. 86(3), pages 562-83, June.
  17. Karl Whelan, 2000. "Computers, obsolescence, and productivity," Finance and Economics Discussion Series 2000-06, Board of Governors of the Federal Reserve System (U.S.).
  18. M. Ishaq Nadiri & Banani Nandi, 1999. "Technical Change, Markup, Divestiture, And Productivity Growth In The U.S. Telecommunications Industry," The Review of Economics and Statistics, MIT Press, vol. 81(3), pages 488-498, August.
  19. Dale W. Jorgenson & Kevin J. Stiroh, 2000. "Raising the Speed Limit: U.S. Economic Growth in the Information Age," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 31(1), pages 125-236.
  20. Ohta, Makoto, 1975. "Production Technologies of the U.S. Boiler and Turbogenerator Industries and Hedonic Price Indexes for Their Products: A Cost-Function Approach," Journal of Political Economy, University of Chicago Press, vol. 83(1), pages 1-26, February.
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