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Measuring embodied technical change in the US local telephone industry

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  • Nakil Sung

Abstract

This study attempts to measure the rate of embodied technical change by using a short-run variable cost function that contains arguments for labour and capital quality. In this short-run variable cost model, the expansion of the amount of physical capital increases variable costs due to more maintenance outlays, and then it leads to improvements in capital quality. When a measure of competition is included as a proxy for organizational efficiency, improvements in labour and capital quality explain more than two-thirds of productivity growth. The degree of returns to scale and the shadow cost of capital input in the embodiment cost model are presented as well. The study is based on pooled time-series and cross-section data of eight US local exchange carriers.

Suggested Citation

  • Nakil Sung, 2002. "Measuring embodied technical change in the US local telephone industry," Applied Economics, Taylor & Francis Journals, vol. 34(1), pages 77-85.
    • Handle: RePEc:taf:applec:v:34:y:2002:i:1:p:77-85
    DOI: 10.1080/00036840010025100
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    1. repec:ucp:bknber:9780226304557 is not listed on IDEAS
    2. Robert J. Gordon, 1990. "The Measurement of Durable Goods Prices," NBER Books, National Bureau of Economic Research, Inc, number gord90-1.
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