Productivity studies that use proxy variable estimators routinely specify single-output production functions despite most firms producing multiple outputs. This is usually accomplished by aggregating the firm's outputs using total revenue. Such a formulation rarely provides an adequate...

We advance the proxy variable approach to production function estimation. We show that the invertibility assumption at its heart is testable. We characterize what goes wrong if invertibility fails and what can still be done. We show that rethinking how the estimation procedure is implemented...

We study Ackerberg, Caves, and Frazer (2015)'s production function estimation method using Monte Carlos simulations. First, we replicate their results by using the same procedure and confirm the existence, as noted by ACF, of a spurious minimum in the estimation. In the population, or when the...

Control function approaches to estimating production functions rely on a proxy that is monotone in an unobserved scalar productivity conditioning on other state variables. Ackerberg, Caves, and Frazer (2015) point out a potential functional dependence problem when conditioning only on capital....

From an empirical perspective, this paper critically examines the concepts of returns to scale (RTS) and economies of scale (EOS), and argues that the concept of EOS is more relevant and broader enough to exhibit proper scale economies behavior of firms. Two approaches, i.e., production function...

This paper analyzes the impact of load factor, facility and generator types on the productivity of Korean electric power plants. In order to capture important differences in the effect of load policy on power output, we use a semiparametric smooth coefficient (SPSC) model that allows us to model...

The regression residual is commonly used as a productivity indicator. However, the observed input demands are endogenous if rational managers adjust their input use for inefficiency. A large stream of studies considers possible solutions to the endogeneity problem that require as little external...

For vectors x and w, let r(x,w) be a function that can be nonparametrically estimated consistently and asymptotically normally. We provide consistent, asymptotically normal estimators for the functions g and h, where r(x,w)=h[g(x),w], g is linearly homogeneous and h is monotonic in g. This...

This paper is concerned with significance testing of the effects of exogenous determinants upon the one-sided deviation term of a semiparametric stochastic frontier model. Two nonparametric significance tests for all or a subset of the determinants of inefficiency are proposed. The proposed...

Objective: This study proposes a novel empirical analysis of the total factor productivity (TFP) growth for Polish microenterprises, focusing on the effect of the global lockdown in 2020. We employed firm-level data covering enterprises with below ten employees to evaluate micro-firms'...