Products and Productivity / Peter K. Schott, Andrew B. Bernard, Stephen J. Redding.

Format:

Book

Author/Creator:

Schott, Peter K.

Contributor:

National Bureau of Economic Research.

Bernard, Andrew B.

Redding, Stephen J.

Series:

Working Paper Series (National Bureau of Economic Research) no. w11575.

NBER working paper series no. w11575

Language:

English

Physical Description:

1 online resource: illustrations (black and white);

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 2005.

Summary:

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.

Notes:

Print version record

August 2005.