Productivity Growth and Efficiency under Leontief Technology: An Application to US Steam-Electric Power Generation Utilities

Margarita Genius, Spyro Stefanou and Vangelis Tzouvelekas
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Spyro Stefanou: Pennsylvania State University

No 913, Working Papers from University of Crete, Department of Economics

Abstract: A theoretical framework is developed for decomposing partial factor productivity and measuring technical inefficiency when the underlying technology is characterized by factor non-substitution. With Farrell's (1957) radial index of technical inefficiency being inappropriate in this case, Russell's (1985; 1987) non-radial indices are adapted to measure technical inefficiency in a Leontief model. A system of factor demand equations with a regime specific technical inefficiency term is proposed and estimated allowing for dependence across inputs using a copula approach. Then the paper presents a complete decomposition of partial factor productivity changes using a dataset of U.S. steam-power electric generation utilities.

New Economics Papers: this item is included in nep-eff, nep-ene and nep-pke
Date: 2009-07-29

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Persistent link: http://EconPapers.repec.org/RePEc:crt:wpaper:0913

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