Total factor productivity growth and convergence in the petroleum industry: Empirical analysis testing for convexity

Kristiaan Kerstens, Shunsuke Managi

Research output: Contribution to journalArticle

18 Citations (Scopus)

Abstract

While economic theory acknowledges that some features of technology (e.g., indivisibilities, economies of scale and specialization) can fundamentally violate the traditional convexity assumption, almost all empirical studies accept the convexity property on faith. In this contribution, we apply two alternative flexible production technologies to measure total factor productivity growth and test the significance of the convexity axiom using a nonparametric test of closeness between unknown distributions. Based on unique field level data on the petroleum industry, the empirical results reveal significant differences, indicating that this production technology is most likely non-convex. Furthermore, we also show the impact of convexity on answers to traditional convergence questions in the productivity growth literature.

Original languageEnglish
Pages (from-to)196-206
Number of pages11
JournalInternational Journal of Production Economics
Volume139
Issue number1
DOIs
Publication statusPublished - Sep 1 2012
Externally publishedYes

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Petroleum industry
Productivity
Testing
Economics
Empirical analysis
Convexity
Total factor productivity growth
Production technology

All Science Journal Classification (ASJC) codes

  • Business, Management and Accounting(all)
  • Economics and Econometrics
  • Management Science and Operations Research
  • Industrial and Manufacturing Engineering

Cite this

Total factor productivity growth and convergence in the petroleum industry : Empirical analysis testing for convexity. / Kerstens, Kristiaan; Managi, Shunsuke.

In: International Journal of Production Economics, Vol. 139, No. 1, 01.09.2012, p. 196-206.

Research output: Contribution to journalArticle

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