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Measuring the Effects of Demand and Supply Factors on Service Sector Productivity

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  • Atsushi OHYAMA

Abstract

Economic activities in the service sector have been increasingly important in developed countries. Despite the importance of the service sector, there are several drawbacks with a conventional way of measuring service sector productivity. This paper proposes an alternative methodology in which we can separate demand and supply factors that influence service transactions. An empirical framework is constructed based on the model of Johnson and Myatt (2003) and allows us to identify cost factors separately from demand factors. This paper also demonstrates that demand factors significantly influence the conventional measure of service sector productivity.

Suggested Citation

  • Atsushi OHYAMA, 2015. "Measuring the Effects of Demand and Supply Factors on Service Sector Productivity," Discussion papers 15042, Research Institute of Economy, Trade and Industry (RIETI).
    • Handle: RePEc:eti:dpaper:15042
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    References listed on IDEAS

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    3. Amit Khandelwal, 2010. "The Long and Short (of) Quality Ladders," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 77(4), pages 1450-1476.
    4. Lucia Foster & John C. Haltiwanger & C. J. Krizan, 2001. "Aggregate Productivity Growth: Lessons from Microeconomic Evidence," NBER Chapters, in: New Developments in Productivity Analysis, pages 303-372, National Bureau of Economic Research, Inc.
    5. Steven T. Berry, 1994. "Estimating Discrete-Choice Models of Product Differentiation," RAND Journal of Economics, The RAND Corporation, vol. 25(2), pages 242-262, Summer.
    6. Masayuki Morikawa, 2011. "Economies of Density and Productivity in Service Industries: An Analysis of Personal Service Industries Based on Establishment-Level Data," The Review of Economics and Statistics, MIT Press, vol. 93(1), pages 179-192, February.
    7. Train,Kenneth E., 2009. "Discrete Choice Methods with Simulation," Cambridge Books, Cambridge University Press, number 9780521766555, November.
    8. T. P. Hill, 1977. "On Goods And Services," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 23(4), pages 315-338, December.
    9. Justin P. Johnson & David P. Myatt, 2003. "Multiproduct Quality Competition: Fighting Brands and Product Line Pruning," American Economic Review, American Economic Association, vol. 93(3), pages 748-774, June.
    10. Zvi Griliches, 1992. "Output Measurement in the Service Sectors," NBER Books, National Bureau of Economic Research, Inc, number gril92-1.
    11. repec:bla:revinw:v:23:y:1977:i:4:p:315-38 is not listed on IDEAS
    12. Diewert, W. Erwin & Nakamura, Alice O., 2007. "The Measurement of Productivity for Nations," Handbook of Econometrics, in: J.J. Heckman & E.E. Leamer (ed.), Handbook of Econometrics, edition 1, volume 6, chapter 66, Elsevier.
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