Productivity and reallocation under monopolistic competition: A Micro panel data analysis

Samuel Vika Mhlanga

South African Journal of Economics, 2023, vol. 91, issue 4, 466-497

Abstract: This article studies the structural aggregate productivity growth (APG) decomposition with demand‐ and supply‐side controls, determines comparative statics predictions for firms and economic outcomes and examines patterns of input distortions. By moving from price‐taking conditions to markets featuring markup heterogeneity for product varieties, the paper finds amplification of production inefficiency from −3.61% to −11.41% and amplification of total factor reallocation from 0.15% to 8.91%. The productivity results are robust to structural variations in the demand function, firm scale adjustment and firm growth. Similarly, input reallocation is robust to variation in demand structure and plant expansion. Furthermore, reallocation under common markups among all firms is robust to reallocation under heterogeneous markups among larger firms. Alternatively, large firms face demand inelasticities and charge higher markups thereby mimicking the behaviour of the survey of all firms. Under autarky, small unproductive plants charge higher markups than their small efficient counterparts. Demand elasticity increases (decreases) with industry output for smaller (larger) plants. Finally, a unit increase in capital intensity for resource‐constrained plants raises labour distortions and reduces capital distortions while reducing capital distortions for resource‐unconstrained firms.

Date: 2023
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://doi.org/10.1111/saje.12355

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:bla:sajeco:v:91:y:2023:i:4:p:466-497

Ordering information: This journal article can be ordered from
http://www.blackwell ... bs.asp?ref=0038-2280

Access Statistics for this article

South African Journal of Economics is currently edited by Philip A. Black

More articles in South African Journal of Economics from Economic Society of South Africa Contact information at EDIRC.
Bibliographic data for series maintained by Wiley Content Delivery ().