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Fixed Cost, Imperfect Competition and Bias in Technology Measurement: Japan and The United States

Author

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  • Kiyohiko G. Nishimura
  • Masato Shirai

Abstract

In many industries, competition is far from perfect and managerial efficiency (or a fixed cost) varies among firms. However, traditional measurement of technological progress assumes perfect competition and no fixed cost. This paper incorporates these two factors in the technological-progress measurement and investigates the biases caused by their omission. We show that if capital growth exceeds non-capital-input growth and that firms earn a positive pure profit, then traditional measurement underestimates the true technological progress. We apply this methodology to Japanese and US industries, and find that imperfect competition and managerial efficiency are important. However, the magnitude of the bias is not large ... Dans de nombreuses industries, la concurrence est loin d'être parfaite, et l'efficience du management (ou de charge fixe) varie selon les entreprises. Cependant, les mesures traditionnelles du progrès technologique impliquent une concurrence parfaite et pas de charge fixe. Ce document incorpore ces deux facteurs dans les mesures du progrès technologique et recherche les distortions causées par leurs omissions. On démontre que, si la croissance du capital est supérieure à celle des autres facteurs, et si les entreprises obtiennent un pur profit, les mesures traditionnelles sous-estiment alors les vrais progrès technologiques. On applique cette méthodologie aux industries japonaises et américaines, et on définit l'importance des imperfections à la concurrence et l'efficience du management. Cependant, l'ampleur des distortions n'est pas énorme ...

Suggested Citation

  • Kiyohiko G. Nishimura & Masato Shirai, 2000. "Fixed Cost, Imperfect Competition and Bias in Technology Measurement: Japan and The United States," OECD Economics Department Working Papers 273, OECD Publishing.
  • Handle: RePEc:oec:ecoaaa:273-en
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    File URL: http://dx.doi.org/10.1787/260256735077
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    Cited by:

    1. Alan J. Auerbach & Maurice Obstfeld, 2005. "The Case for Open-Market Purchases in a Liquidity Trap," American Economic Review, American Economic Association, vol. 95(1), pages 110-137, March.
    2. Emi Nakamura & Masao Nakamura (presenter) & Takanobu Nakajima, 2004. "Measuring Firms’ R&D Effects on Technical Progress: Japan in the 199," Econometric Society 2004 Far Eastern Meetings 414, Econometric Society.

    More about this item

    Keywords

    charge fixe; compétition imparfaite; efficience du management; fixed cost; imperfect competition; industries japonaises et américaines; Japanese and US Industries; managerial efficiency; progrès technologique; technological progress;

    JEL classification:

    • D20 - Microeconomics - - Production and Organizations - - - General
    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection
    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
    • L16 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Industrial Organization and Macroeconomics; Macroeconomic Industrial Structure
    • O30 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - General
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes
    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence
    • O51 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - U.S.; Canada
    • O53 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Asia including Middle East

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