EconPapers    
Economics at your fingertips  
 

On Input Market Frictions and Estimation of Factors' Demand

Arnaud Dupuy () and Todd Sorensen ()

Southern Economic Journal, 2014, vol. 80, issue 3, 772-781

Abstract: In this article, we explore the impact of imperfectly competitive input markets on production function estimation. First-order profit-maximizing conditions are altered when frictions in input markets cause the elasticity of input supply to the firm to be finite. A consequence of this is that the standard econometric model used for production function estimation will be misspecified. We prove that, in all nontrivial cases, finite elasticities of supply to the firm will lead to inconsistent estimates of production function parameters. Monte Carlo simulations show that the resulting bias can be economically significant.

JEL-codes: D2 J42 J2 (search for similar items in EconPapers)
Date: 2014
References: Add references at CitEc
Citations: View citations in EconPapers (3) Track citations by RSS feed

Downloads: (external link)
http://dx.doi.org/10.4284/0038-4038-2012.245

Related works:
Journal Article: On Input Market Frictions and Estimation of Factors' Demand (2014) Downloads
Working Paper: On Input Market Frictions and Estimation of Factors' Demand (2013) Downloads
Working Paper: On Input Market Frictions and Estimation of Factors’ Demand (2012) Downloads
Working Paper: On Input Market Frictions and Estimation of Factors Demand (2011) Downloads
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:sej:ancoec:v:80:3:y:2014:p:772-781

Access Statistics for this article

Southern Economic Journal is currently edited by Laura Razzolini

More articles in Southern Economic Journal from Southern Economic Association Contact information at EDIRC.
Bibliographic data for series maintained by Laura Razzolini ( this e-mail address is bad, please contact ).

 
Page updated 2021-04-09
Handle: RePEc:sej:ancoec:v:80:3:y:2014:p:772-781