1. Prices, Profits, Proxies, and Production
- Author:
- Victor H. Aguiar, Roy Allen, and Nail Kashaev
- Publication Date:
- 03-2020
- Content Type:
- Working Paper
- Institution:
- Centre for Human Capital and Productivity (CHCP), Western University
- Abstract:
- This paper studies nonparametric identification and counterfactual bounds for heterogeneous firms that can be ranked in terms of productivity. Our approach works when quantities and prices are latent rendering standard approaches inapplicable. Instead, we require observation of profits or other optimizing-values such as costs or revenues, and either prices or price proxies of flexibly chosen variables. We extend classical duality results for price-taking firms to a setup with discrete heterogeneity, endogeneity, and limited variation in possibly latent prices. Finally, we show that convergence results for nonparametric estimators may be directly converted to convergence results for production sets.
- Topic:
- Economics, Human Capital, Profit, Productivity, and Price
- Political Geography:
- Canada and Global Focus