The Dynamics of Productivity in the Telecommunications Equipment Industry

Technological change and deregulation have caused a major restructuring of the telecommunications equipment industry over the last two decades. Our empirical focus is on estimating the parameters of a production function for the equipment industry, and then using those estimates to analyze the evolu...

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Veröffentlicht in:Econometrica 1996-11, Vol.64 (6), p.1263-1297
Hauptverfasser: Olley, G. Steven, Pakes, Ariel
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creator Olley, G. Steven
Pakes, Ariel
description Technological change and deregulation have caused a major restructuring of the telecommunications equipment industry over the last two decades. Our empirical focus is on estimating the parameters of a production function for the equipment industry, and then using those estimates to analyze the evolution of plant-level productivity. The restructuring involved significant entry and exit and large changes in the sizes of incumbents. Firms' choices on whether to liquidate, and on input quantities should they continue, depended on their productivity. This generates a selection and a simultaneity problem when estimating production functions. Our theoretical focus is on providing an estimation algorithm which takes explicit account of these issues. We find that our algorithm produces markedly different and more plausible estimates of production function coefficients than do traditional estimation procedures. Using our estimates we find increases in the rate of aggregate productivity growth after deregulation. Since we have plant-level data we can introduce indices which delve deeper into how this productivity growth occurred. These indices indicate that productivity increases were primarily a result of a reallocation of capital towards more productive establishments.
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identifier ISSN: 0012-9682
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subjects Algorithms
Analytical estimating
Applied sciences
Coefficients
Computer science
control theory
systems
Control theory. Systems
Deregulation
Econometrics
Estimates
Estimating techniques
Estimation bias
Estimators
Exact sciences and technology
Industrial machinery
Industrial productivity
Industrial regulation
Process control. Computer integrated manufacturing
Production estimates
Production functions
Productivity
Studies
Telecommunications industry
U.S.A
title The Dynamics of Productivity in the Telecommunications Equipment Industry
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