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- Title
Products and Productivity.
- Authors
Bernard, Andrew B.; Redding, Stephen J.; Schott, Peter K.
- Abstract
When firms make decisions about which product to manufacture at a more disaggregated level than observed in the data, measured firm productivity reflects both characteristics of the firm and attributes of the products that are non-randomly chosen by the firm. This paper develops a model of industry equilibrium in which firms endogenously sort across products and characterizes the resulting bias in measured firm and aggregate productivity. Calibrating the model's parameters, we show that endogenous product selection can have quantitatively important effects on measured firm and aggregate productivity and their response to changes in parameter values.
- Subjects
INDUSTRIAL productivity; INDUSTRIAL efficiency; BUSINESS enterprises; ECONOMIC models; PRODUCTION (Economic theory)
- Publication
Scandinavian Journal of Economics, 2009, Vol 111, Issue 4, p681
- ISSN
0347-0520
- Publication type
Article
- DOI
10.1111/j.1467-9442.2009.01584.x