The paper presents a new framework to assess firm level heterogeneity and to study the rate and direction of technical change. Building on the analysis of revealed short-run production functions by Hildenbrand (1981), we propose the (normalized) volume of the zonotope composed by vectors-firms in a narrowly defined industry as an indicator of inter-firm heterogeneity. Moreover, the angles that the main diagonal of the zonotope form with the axes provides a measure of the rates and directions of technical change over time. The proposed framework can easily account for n-inputs and m-outputs and, crucially, the measures of heterogeneity and technical change do not require many of the standard assumptions from production theory.

Production Theory: Accounting for Firm Heterogeneity and Technical Change / Dosi, Giovanni; Grazzi, Marco; Marengo, Luigi; Settepanella, Simona. - In: JOURNAL OF INDUSTRIAL ECONOMICS. - ISSN 0022-1821. - 64:4(2016), pp. 875-907. [10.1111/joie.12128]

Production Theory: Accounting for Firm Heterogeneity and Technical Change

MARENGO, LUIGI;
2016

Abstract

The paper presents a new framework to assess firm level heterogeneity and to study the rate and direction of technical change. Building on the analysis of revealed short-run production functions by Hildenbrand (1981), we propose the (normalized) volume of the zonotope composed by vectors-firms in a narrowly defined industry as an indicator of inter-firm heterogeneity. Moreover, the angles that the main diagonal of the zonotope form with the axes provides a measure of the rates and directions of technical change over time. The proposed framework can easily account for n-inputs and m-outputs and, crucially, the measures of heterogeneity and technical change do not require many of the standard assumptions from production theory.
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Utilizza questo identificativo per citare o creare un link a questo documento: http://hdl.handle.net/11385/172461
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