Prices, Profits, Proxies, and Production

Victor Aguiar, Nail Kashaev and Roy Allen

No 20226, University of Western Ontario, Departmental Research Report Series from University of Western Ontario, Department of Economics

Abstract: This paper studies nonparametric identification and counterfactual bounds for heterogeneous firms that can be ranked in terms of productivity. Our approach works when quantities and prices are latent, rendering standard approaches inapplicable. Instead, we require observation of profits or other optimizing-values such as costs or revenues, and either prices or price proxies of flexibly chosen variables. We extend classical duality results for price-taking firms to a setup with discrete heterogeneity, endogeneity, and limited variation in possibly latent prices. Finally, we show that convergence results for nonparametric estimators may be directly converted to convergence results for production sets.

Keywords: Counterfactual Bounds; Cost Minimization; Nonseparable Heterogeneity; Partial Identification; Profit Maximization; Production Set; Revenue Maximization; Shape Restrictions (search for similar items in EconPapers)
JEL-codes: C5 D24 (search for similar items in EconPapers)
Date: 2022
New Economics Papers: this item is included in nep-dem, nep-ecm and nep-eff
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Related works:
Journal Article: Prices, profits, proxies, and production (2023)
Working Paper: Prices, Profits, Proxies, and Production (2022)
Working Paper: Prices, Profits, Proxies, and Production (2020)
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