TY - JOUR
T1 - Total factor productivity growth and convergence in the petroleum industry
T2 - Empirical analysis testing for convexity
AU - Kerstens, Kristiaan
AU - Managi, Shunsuke
PY - 2012/9/1
Y1 - 2012/9/1
N2 - 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.
AB - 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.
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U2 - 10.1016/j.ijpe.2012.04.008
DO - 10.1016/j.ijpe.2012.04.008
M3 - Article
AN - SCOPUS:84863216151
VL - 139
SP - 196
EP - 206
JO - International Journal of Production Economics
JF - International Journal of Production Economics
SN - 0925-5273
IS - 1
ER -