Scalable versus Productive Technologies

Mons Chan, Guangbin Hong, Joachim Hubmer (), Serdar Ozkan and Sergio Salgado Ibáñez
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Joachim Hubmer: https://economics.sas.upenn.edu/people/joachim-hubmer

No 2024-019, Working Papers from Federal Reserve Bank of St. Louis

Abstract: CORRECT ORDER OF AUTHORS: Hubmer, Chan, Ozkan, Salgado, Hong. Are larger firms more productive, more scalable, or both? We use firm-level panel data from thirteen countries and employ a broad set of methods to estimate factor elasticities---capturing returns to scale (RTS)---and total factor productivity (TFP). We find substantial RTS heterogeneity within industries, with larger firms exhibiting higher RTS driven by greater intermediate input elasticities. TFP, by contrast, rises with firm size only up to the top decile before declining. Incorporating RTS heterogeneity into a standard model of entrepreneurship more than doubles the efficiency losses from financial frictions compared with a conventional calibration with only TFP differences.

Keywords: production function heterogeneity; returns to scale; firm-size distribution; misallocation (search for similar items in EconPapers)
JEL-codes: D24 E22 E23 L11 (search for similar items in EconPapers)
Pages: 74 pages
Date: 2024-07-11, Revised 2025-05-06
New Economics Papers: this item is included in nep-bec, nep-eff, nep-ent and nep-tid
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DOI: 10.20955/wp.2024.019

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