Production theory: accounting for firm heterogeneity and technical change

Giovanni Dosi, Marco Grazzi, Luigi Marengo () and Simona Settepanella

LEM Papers Series from Laboratory of Economics and Management (LEM), Sant'Anna School of Advanced Studies, Pisa, Italy

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 provides 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 (search for similar items in EconPapers)
Date: 2013
New Economics Papers: this item is included in nep-eff
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Citations: View citations in EconPapers (6)

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Related works:
Journal Article: Production Theory: Accounting for Firm Heterogeneity and Technical Change (2016)
Working Paper: Production theory: accounting for firm heterogeneity and technical change (2014)
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Persistent link: https://EconPapers.repec.org/RePEc:ssa:lemwps:2013/22

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