Production Theory: Accounting for Firm Heterogeneity and Technical Change

Quaderni - Working Paper DSE N° 931

28 Pages Posted: 12 Mar 2014

See all articles by Giovanni Dosi

Giovanni Dosi

Scuola Superiore Sant'Anna di Pisa - Laboratory of Economics and Management (LEM)

Marco Grazzi

Universita' Cattolica del Sacro Cuore

Luigi Marengo

Scuola Superiore Sant'Anna di Pisa - Laboratory of Economics and Management (LEM)

Simona Settepanella

Hokkaido University

Date Written: March 11, 2014

Abstract

The paper presents a new framework to assess firm level heterogeneity and to study the rate and direction of technical change. Building on the analysis of revealed short-run production functions by Hildenbrand (1981), we propose the (normalized) volume of the zonotope composed by vectors-firms in a narrowly defined industry as an indicator of inter-firm heterogeneity. Moreover, the angles that the main diagonal of the zonotope form with the axes provide a measure of the rates and directions of technical change over time. The proposed framework can easily account for n-inputs and m-outputs and, crucially, the measures of heterogeneity and technical change do not require many of the standard assumptions from production theory.

Keywords: Production theory, Heterogeneous firms, Activity Analysis, Technical change, Zonotopes, Production functions

JEL Classification: D24, D61, C67, C81, O30

Suggested Citation

Dosi, Giovanni and Grazzi, Marco and Marengo, Luigi and Settepanella, Simona, Production Theory: Accounting for Firm Heterogeneity and Technical Change (March 11, 2014). Quaderni - Working Paper DSE N° 931, Available at SSRN: https://ssrn.com/abstract=2407421 or http://dx.doi.org/10.2139/ssrn.2407421

Giovanni Dosi (Contact Author)

Scuola Superiore Sant'Anna di Pisa - Laboratory of Economics and Management (LEM) ( email )

Piazza Martiri della Liberta, 33
Pisa, I-56127
Italy

HOME PAGE: www.lem.sssup.it

Marco Grazzi

Universita' Cattolica del Sacro Cuore ( email )

1 Largo A. Gemelli
Milano (Milan), MI Milano 20123
Italy

Luigi Marengo

Scuola Superiore Sant'Anna di Pisa - Laboratory of Economics and Management (LEM) ( email )

Piazza Martiri della Liberta', 33-I-56127
Pisa
Italy

Simona Settepanella

Hokkaido University ( email )

5 Kita 8 Jonishi, Kita Ward
Hokkaido Prefecture
Sapporo, Hokkaido 060-0808
Japan

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