Prices, Profits, and Production: Identification and Counterfactuals
Victor Aguiar (),
Roy Allen and
Papers from arXiv.org
This paper studies nonparametric identification and counterfactual bounds for heterogeneous firms that can be ranked in terms of productivity. We require observation of profits or other optimizing-values such as costs or revenues, and either prices or attributes that determine prices. We extend classical duality results for price-taking firms to a setup with rich heterogeneity, and with limited variation in prices. We characterize the identified set for production sets, and provide conditions that ensure point identification. We present a general computationally-feasible framework for sharp counterfactual bounds, such as bounds on quantities at a counterfactual price. We show that existing convergence results for quantile estimators may be directly converted to convergence results for production sets, which facilitates statistical inference.
New Economics Papers: this item is included in nep-eff
Date: 2018-10, Revised 2019-01
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Persistent link: https://EconPapers.repec.org/RePEc:arx:papers:1810.04697
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