Resource Allocation in Multi-divisional Multi-product Firms

Binlei Gong () and Robin Sickles

Working Papers from Rice University, Department of Economics

Abstract: This paper is concerned with specifying and estimating the productive characteristics of multidivisional multiproduct companies at the divisional level. In order to accomplish this, we augment division-level information with inputs that are imputed based on profit-maximizing allocations within each division. This study builds on work by De Loecker et al. (2016) as well as Olley and Pakes (1996), Levinsohn and Petrin (2003) and Ackerberg et al. (2015), and extends this work by lifting a key assumption that single- and multi-product/division firms have the same production technique for the same product/segment. We estimate the production function and impute input allocations simultaneously in the absence of this key assumption as well as the constant share constraint of the input portfolio. Finally, our approach is applied to estimate the division-specific productivity of firms that compete in five segments of the global oilfield market.

JEL-codes: D02 (search for similar items in EconPapers)
Date: 2018-03
New Economics Papers: this item is included in nep-eff
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Citations: View citations in EconPapers (4)

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Related works:
Journal Article: Resource allocation in multi-divisional multi-product firms (2021)
Working Paper: Resource Allocation in Multi-divisional Multi-product Firms (2019)
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Persistent link: https://EconPapers.repec.org/RePEc:ecl:riceco:18-002

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