Information Technology, Productivity and Asset Ownership: Evidence from Taxicab Fleets

38 Pages Posted: 1 Dec 2009 Last revised: 1 Oct 2012

See all articles by Evan Rawley

Evan Rawley

University of Minnesota - Twin Cities - Carlson School of Management

Timothy Simcoe

Boston University - Questrom School of Business; NBER

Multiple version iconThere are 2 versions of this paper

Date Written: February 23, 2012

Abstract

This paper develops a simple model that links the adoption of a productivity-enhancing technology to increased vertical integration and a less skilled workforce. We test the model’s key prediction using novel micro data on vehicle ownership patterns from the Economic Census during a period when computerized dispatching systems were first adopted by taxicab firms. Controlling for time-invariant firm-specific effects, firms increase the proportion of taxicabs under fleet-ownership by 12 percent when they adopt new computerized dispatching systems. Using increasingly stringent econometric tests, we verify that the baseline tests are indicative of a casual relationship between dispatching technology adoption and vertical integration. These findings suggest that increasing a firm’s productivity can lead to increased vertical integration, even in the absence of asset specificity.

Keywords: asset ownership, productivity, information technology

JEL Classification: L22

Suggested Citation

Rawley, Evan and Simcoe, Timothy S., Information Technology, Productivity and Asset Ownership: Evidence from Taxicab Fleets (February 23, 2012). US Census Bureau Center for Economic Studies Paper No. CES-WP- 09-39, Available at SSRN: https://ssrn.com/abstract=1515694 or http://dx.doi.org/10.2139/ssrn.1515694

Evan Rawley (Contact Author)

University of Minnesota - Twin Cities - Carlson School of Management ( email )

19th Avenue South
Minneapolis, MN 55455
United States

Timothy S. Simcoe

Boston University - Questrom School of Business ( email )

595 Commonwealth Avenue
Boston, MA MA 02215
United States

NBER ( email )

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

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