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The Measurement of Productivity and Scarcity Rent: the Case of Asbestos in Canada

Author

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  • Gatien, M.A.
  • Lasserre, P.
  • Ouellette, P.

Abstract

In Order to Compute an Index of Total Factor Productivity, It Is Necessary to Know Returns to Scale and Interval Valuations of Quasi-Fixed Factors; Neither Are Directly Observable. in Resource Industries This Problem Is Compounded by the Facts That Returns to Scale Are Important and That There Is No Market Valuation of the Resource Input to Use As a Substitute for Its Internal Valuation. Both Can Be Estimated by Econometric Methods Provided the Underlying Model Is Compatible with the Theory of Technological Change Which Accounts for the Productivity Changes to Be Measured. We Estimate a Form of the Translog Cost Function Which Allows for Both Induced and Exogenous, Biaised Or Neutral, Technological Change, Using Data From the Asbestos Industry in Canada. Then We Exploit the Fact That an Internal Valuation of Quasi-Fixed Factors Is Given by the Negative of the Partial Derivatives of the Cost Function with Respect to the Appropriate Input Quantities. Not Surprinsingly, We Find That the Implicit Rental Price of Asbestos Reserves Has Dropped Sharply After 1975, But Represented a Substancial Share of Total Implicit Costs in Earlier Years. We Also Find That Induced Technological Change Is Important in the Asbestos Sector. the Econometric Productivity Index Which Is Computed on the Basis of Our Estimated Model Sharply Differs From the Divisia Index, As Computed Under the Assumption of Constant Return to Scale and Ignoring the Role of the Resource As an Input.

Suggested Citation

  • Gatien, M.A. & Lasserre, P. & Ouellette, P., 1987. "The Measurement of Productivity and Scarcity Rent: the Case of Asbestos in Canada," Cahiers de recherche 8747, Universite de Montreal, Departement de sciences economiques.
    • Handle: RePEc:mtl:montde:8747
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    Cited by:

    1. Lee, Myunghun, 2007. "Measurement of the in situ value of exhaustible resources: An input distance function," Ecological Economics, Elsevier, vol. 62(3-4), pages 490-495, May.
    2. Ludo Peeters & Yves Surry, 2000. "Incorporating Price-Induced Innovation in a Symmetric Generalised McFadden Cost Function with Several Outputs," Journal of Productivity Analysis, Springer, vol. 14(1), pages 53-70, July.
    3. Cees Withagen, 1998. "Untested Hypotheses in Non-Renewable Resource Economics," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 11(3), pages 623-634, April.
    4. Dachraoui, Kaïs Harchaoui, Tarek, 2004. "Water Use, Shadow Prices and the Canadian Business Sector Productivity Performance," Economic Analysis (EA) Research Paper Series 2004026e, Statistics Canada, Analytical Studies Branch.
    5. Esposti, Roberto & Pierani, Pierpaolo, 2008. "Price-induced technical progress in Italian agriculture," Review of Agricultural and Environmental Studies - Revue d'Etudes en Agriculture et Environnement (RAEStud), Institut National de la Recherche Agronomique (INRA), vol. 89(4).
    6. Stuermer, Martin & Schwerhoff, Gregor, 2013. "Technological change in resource extraction and endogenous growth," Bonn Econ Discussion Papers 12/2013, University of Bonn, Bonn Graduate School of Economics (BGSE).
    7. Villena, Marcelo & Greve, Fernando, 2018. "On resource depletion and productivity: The case of the Chilean copper industry," Resources Policy, Elsevier, vol. 59(C), pages 553-562.
    8. Jeffrey A. Krautkraemer, 1998. "Nonrenewable Resource Scarcity," Journal of Economic Literature, American Economic Association, vol. 36(4), pages 2065-2107, December.
    9. Dachraoui, Kaïs Harchaoui, Tarek, 2004. "Utilisation de l'eau, prix fictifs et productivité du secteur canadien des entreprises," Série de documents de recherche sur l'analyse économique (AE) 2004026f, Statistics Canada, Direction des études analytiques.
    10. Gregor Schwerhoff & Martin Stuermer, 2015. "Non-renewable resources, extraction technology, and endogenous growth," Working Papers 1506, Federal Reserve Bank of Dallas.

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