Market Power, Scale Economies and Productivity: Estimates from a Panel of Establishment Data

Tor Klette

Journal of Industrial Economics, 1999, vol. 47, issue 4, 451-476

Abstract: This paper presents a new econometric framework that permits simultaneous estimation of price‐cost margins, scale economies and productivity from a panel of establishment data. The model contains only a few, economically interesting parameters to be estimated, but it is nevertheless consistent with a flexible (translog) underlying technology, quasi‐fixed capital and the presence of persistent differences in productivity between establishments. The framework is applied to study market power, scale economies and productivity differences in a number of manufacturing industries in Norway. The results reveal statistically significant, but quite small, margins between price and marginal costs in most manufacturing industries.

Date: 1999
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https://doi.org/10.1111/1467-6451.00108

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Working Paper: Market Power, Scale Economies and Productivity: Estimates from a Panel of Establishment Data (1998)
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