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Econometric analysis of productivity with measurement error: Empirical application to the US Railroad industry

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  • Coublucq, Daniel

Abstract

This paper analyzes the productivity in the US rail industry for the period 1980 - 2006. I propose a value-added production framework to circumvent the problem of measurement error in one input. I find evidence showing that aggregate productivity gains can be attributed to returns to scale and the reshuffling of resources to more efficient firms. However, productivity slows down for the period 1995 - 2000 after important concentrations. I also look at the correlations between firm-level productivity and the operating environment. My results show that failing to control for the omitted price variable bias leads to an overestimation of productivity gains.

Suggested Citation

  • Coublucq, Daniel, 2013. "Econometric analysis of productivity with measurement error: Empirical application to the US Railroad industry," DICE Discussion Papers 95, Heinrich Heine University Düsseldorf, Düsseldorf Institute for Competition Economics (DICE).
    • Handle: RePEc:zbw:dicedp:95
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    References listed on IDEAS

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    Cited by:

    1. Roman Fossati & Heiko Rachinger, 2021. "Total Factor Productivity: Exploring firms’ dynamics and heterogeneity over the business cycle," Asociación Argentina de Economía Política: Working Papers 4471, Asociación Argentina de Economía Política.

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    More about this item

    Keywords

    industry dynamics; measurement error; productivity; selection; simultaneity; railroad industry;
    All these keywords.

    JEL classification:

    • C24 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Truncated and Censored Models; Switching Regression Models; Threshold Regression Models
    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
    • L50 - Industrial Organization - - Regulation and Industrial Policy - - - General
    • L92 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Railroads and Other Surface Transportation
    • L98 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Government Policy

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