Productivity Change over Time and the Dynamics of Cost Competitiveness: A Nonparametric Analysis of U.S. Manufacturing Data

Subhash Ray

No 2012-39, Working papers from University of Connecticut, Department of Economics

Abstract: Firms within a state, states within a country, and countries across the world are continuously striving to enhance their competitiveness in the present age of globalization. This paper defines competitiveness of a production unit as the relative cost of production per unit of output. Basic concepts from neoclassical production economics are used to provide a detailed decomposition of cost competitiveness of a firm relative to a rival. It is also shown how changes in efficiency and relative input prices along with technical change affect the evolution of cost competitiveness of a firm over time. State level data from the U.S. Census of Manufacturers from the years 1992, 1997, 2002, and 2007 are used in a empirical application of the proposed methodology using Data Envelopment Analysis. JEL Classification: C61, L25, O14 Key words: Data Envelopment Analysis, Cost Efficiency, Technical Change

Pages: 31 pages
Date: 2012-11
New Economics Papers: this item is included in nep-bec and nep-eff
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