Fixed-Effect Estimation of Highly-Mobile Production Technologies

Abstract

We consider fixed-effect estimation of a production function where inputs and outputs vary over time, space, and cross-sectional unit. Variability in the spatial dimension allows for time-varying individual effects, without parametric assumptions on the effects. Asymptotics along the spatial dimension provide consistency and normality of the marginal products. A finite-sample example is provided: a production function for bottom-trawler fishing vessels in the flatfish fisheries of the Bering Sea. We find significant spatial variability of output (catch) which we exploit in estimation of a harvesting function.

Keywords: Panel data, time-varying individual effect, spatial econometrics, fisheries, agriculture, heteroskedasticity

JEL Classification: C23, D24, N50