Technical Change, Markup, Divestiture, And Productivity Growth In The U.S. Telecommunications Industry

M. Ishaq Nadiri and Banani Nandi

The Review of Economics and Statistics, 1999, vol. 81, issue 3, 488-498

Abstract: This paper examines the sources of productivity growth for the U.S. telecommunications industry from 1935 to 1987. These years encompass both the pre- and post-AT&T divestiture periods. We formulate a structural model that accounts for both changes in the cost and the demand side of the industry. We measure the contributions of aggregate demand, information intensity of the economy, price-cost margins, relative factor prices, direct and indirect effects of technological progress, and R&D investment on total-factor productivity (TFP) growth rate. We show that TFP growth rate as conventionally measured is a seriously biased measure of rate of technical change in this industry. © 1999 by the President and Fellows of Harvard College and the Massachusetts Institute of Technology

Date: 1999
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