Estimating Production Functions of Multiproduct Firms

Arbeitspapier

Despite the fact that multiproduct firms constitute a considerable share of firms and account for an even greater share of production, virtually all production function estimates are based on the assumption that firms are single-product producers. The single-product assumption is made due to lack of data on input allocation across the various product lines multiproduct firms operate. I provide a method to estimate product-level production functions without observable input allocations. The empirical application and Monte Carlo simulations show that the single-product firm assumption leads to biased parameter and productivity estimates and overestimated productivity differences between firms.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: ETLA Working Papers ; No. 37

Classification and Topics

• Classification: Wirtschaft ; Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity ; Production, Pricing, and Market Structure; Size Distribution of Firms ; Firm Performance: Size, Diversification, and Scope
• Subject: Multiproduct firm ; production function ; productivity

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Valmari, Nelli
• Event: Veröffentlichung
• (who): The Research Institute of the Finnish Economy (ETLA)
• (where): Helsinki
• (when): 2016

Further information

• Handle: http://hdl.handle.net/10419/201252
• Last update: 10.03.2025, 11:42 AM CET