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Structural identification of production functions

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  • Ackerberg, Daniel
  • Caves, Kevin
  • Frazer, Garth

Abstract

This paper examines some of the recent literature on the identi�cation of production functions. We focus on structural techniques suggested in two recent papers, Olley and Pakes (1996), and Levinsohn and Petrin (2003). While there are some solid and intuitive indenti�cation ideas in these papers, we argue that the techniques, particularly those of Levinsohn and Petrin, su¤er from collinearity problems which we believe cast doubt on the methodology. We then suggest alternative methodologies which make use of the ideas in these papers, but do not su¤er from these collinearity problems.

Suggested Citation

  • Ackerberg, Daniel & Caves, Kevin & Frazer, Garth, 2006. "Structural identification of production functions," MPRA Paper 38349, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:38349
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    References listed on IDEAS

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    More about this item

    Keywords

    Production Functions; Industrial Organization;

    JEL classification:

    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity

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