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http://ssrn.com/abstract=788440
 
 

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Products and Productivity


Andrew B. Bernard


Dartmouth College - Tuck School of Business; National Bureau of Economic Research (NBER); Centre for Economic Policy Research (CEPR)

Stephen J. Redding


Princeton University

Peter K. Schott


Yale University - School of Management; National Bureau of Economic Research (NBER)

August 2005

NBER Working Paper No. w11575

Abstract:     
Firms' decisions about which goods to produce are often made at a more disaggregate level than the data observed by empirical researchers. When products differ according to production technique or the way in which they enter demand, this data aggregation problem introduces a bias into standard measures of firm productivity. We develop a theoretical model of heterogeneous firms endogenously self-selecting into heterogeneous products. We characterize the bias introduced by unobserved variation in product mix across firms, and the implications of this bias for identifying firm and industry responses to exogenous policy shocks such as deregulation. More generally, we demonstrate that product switching gives rise to a richer set of industry-level dynamics than models where firm product mix remains fixed.

Number of Pages in PDF File: 45

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Date posted: October 17, 2005  

Suggested Citation

Bernard, Andrew B. and Redding, Stephen J. and Schott, Peter K., Products and Productivity (August 2005). NBER Working Paper No. w11575. Available at SSRN: http://ssrn.com/abstract=788440

Contact Information

Andrew B. Bernard (Contact Author)
Dartmouth College - Tuck School of Business ( email )
100 Tuck Hall
Hanover, NH 03755
United States
603-646-0302 (Phone)
603-646-9084 (Fax)
HOME PAGE: http://mba.tuck.dartmouth.edu/pages/faculty/Andrew.Bernard/
National Bureau of Economic Research (NBER)
1050 Massachusetts Avenue
Cambridge, MA 02138
United States
Centre for Economic Policy Research (CEPR) ( email )
77 Bastwick Street
London, EC1V 3PZ
United Kingdom
Stephen J. Redding
Princeton University ( email )
Princeton, NJ 08544-1021
United States
HOME PAGE: http://www.princeton.edu/~reddings/
Peter K. Schott
Yale University - School of Management ( email )
135 Prospect Street
P.O. Box 208200
New Haven, CT 06520-8200
United States
203-436-4260 (Phone)
203-436-6974 (Fax)
HOME PAGE: http://www.som.yale.edu/faculty/pks4
National Bureau of Economic Research (NBER)
1050 Massachusetts Avenue
Cambridge, MA 02138
United States
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