Products and Productivity

Peter Schott, Andrew Bernard and Stephen Redding

No 11575, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: Firms' decisions about which goods to produce are often made at a more disaggregate level than the data observed by empirical researchers. When products differ according to production technique or the way in which they enter demand, this data aggregation problem introduces a bias into standard measures of firm productivity. We develop a theoretical model of heterogeneous firms endogenously self-selecting into heterogeneous products. We characterize the bias introduced by unobserved variation in product mix across firms, and the implications of this bias for identifying firm and industry responses to exogenous policy shocks such as deregulation. More generally, we demonstrate that product switching gives rise to a richer set of industry-level dynamics than models where firm product mix remains fixed.

JEL-codes: D21 L11 L60 (search for similar items in EconPapers)
Date: 2005-08
Note: ITI PR
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (12)

Published as Andrew B. Bernard & Stephen J. Redding & Peter K. Schott, 2009. "Products and Productivity," Scandinavian Journal of Economics, Blackwell Publishing, vol. 111(4), pages 681-709, December.

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Related works:
Journal Article: Products and Productivity (2009)
Working Paper: Products and Productivity (2008)
Working Paper: Products and Productivity (2005)
Working Paper: Products and Productivity (2005)
Working Paper: Products and productivity (2005)
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