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Productivity Change over Time and the Dynamics of Cost Competitiveness: A Nonparametric Analysis of U.S. Manufacturing Data


  • Subhash Ray

    (University of Connecticut)


Firms within a state, states within a country, and countries across the world are continuously striving to enhance their competitiveness in the present age of globalization. This paper defines competitiveness of a production unit as the relative cost of production per unit of output. Basic concepts from neoclassical production economics are used to provide a detailed decomposition of cost competitiveness of a firm relative to a rival. It is also shown how changes in efficiency and relative input prices along with technical change affect the evolution of cost competitiveness of a firm over time. State level data from the U.S. Census of Manufacturers from the years 1992, 1997, 2002, and 2007 are used in a empirical application of the proposed methodology using Data Envelopment Analysis. JEL Classification: C61, L25, O14 Key words: Data Envelopment Analysis, Cost Efficiency, Technical Change

Suggested Citation

  • Subhash Ray, 2012. "Productivity Change over Time and the Dynamics of Cost Competitiveness: A Nonparametric Analysis of U.S. Manufacturing Data," Working papers 2012-39, University of Connecticut, Department of Economics.
  • Handle: RePEc:uct:uconnp:2012-39

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    References listed on IDEAS

    1. E. Grifell-Tatjé & C.A.K. Lovell, 2000. "Cost and productivity," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 21(1), pages 19-30.
    2. Ray, Subhash C. & Chen, Lei & Mukherjee, Kankana, 2008. "Input price variation across locations and a generalized measure of cost efficiency," International Journal of Production Economics, Elsevier, vol. 116(2), pages 208-218, December.
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    JEL classification:

    • C61 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Optimization Techniques; Programming Models; Dynamic Analysis
    • L25 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Performance
    • O14 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Industrialization; Manufacturing and Service Industries; Choice of Technology

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