Identifying Productivity When It Is a Factor of Production

47 Pages Posted: 13 Nov 2017 Last revised: 2 Sep 2019

Date Written: August 30, 2019

Abstract

Economists typically model a plant's productivity as an exogenous characteristic, but the people who run and work at manufacturing plants make choices, at a cost, that affect plant productivity. I develop a method to partially identify the productivity distribution when such choices determine productivity. The method uses a monotone comparative static result I prove in a general economic model. It does not require instruments or timing assumptions. I use the method to study the effect of implementing market-based pricing on productivity in the electricity generation industry.

Keywords: Productivity, Partial Identification, Technology Choice, Identification of Production Functions, Power Plants, Restructuring

JEL Classification: D24, L11, L94

Suggested Citation

Flynn, Zach, Identifying Productivity When It Is a Factor of Production (August 30, 2019). Available at SSRN: https://ssrn.com/abstract=3068560 or http://dx.doi.org/10.2139/ssrn.3068560

Zach Flynn (Contact Author)

Afiniti ( email )

1701 Pennsylvania Ave
Washington, DC 20006
United States

HOME PAGE: http://zflynn.com

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