Identification Properties for Estimating the Impact of Regulation on Markups and Productivity
This paper addresses several shortcomings in the productivity and markup estimation literature. Using Monte-Carlo simulations, the analysis shows that the methods in Ackerberg, Caves and Frazer (2015) and De Loecker and Warzynski (2012) produce bia...
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World Bank, Washington, DC
2021
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| Online Access: | http://documents.worldbank.org/curated/en/560821611247482947/Identification-Properties-for-Estimating-the-Impact-of-Regulation-on-Markups-and-Productivity http://hdl.handle.net/10986/35070 |
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okr-10986-350702022-09-20T00:10:24Z Identification Properties for Estimating the Impact of Regulation on Markups and Productivity Sampi, James Jooste, Charl Vostroknutova, Ekaterina PRODUCTIVITY MARKUPS REGULATION PRODUCTION FUNCTION MARKOV PROCESS QUASI-MAXIMUM LIKELIHOOD COMPETITION POLICY This paper addresses several shortcomings in the productivity and markup estimation literature. Using Monte-Carlo simulations, the analysis shows that the methods in Ackerberg, Caves and Frazer (2015) and De Loecker and Warzynski (2012) produce biased estimates of the impact of policy variables on markups and productivity. This bias stems from endogeneity due to the following: (1) the functional form of the production function; (2) the omission of demand shifters; (3) the absence of price information; (4) the violation of the Markov process for productivity; and (5) misspecification when marginal costs are excluded in the estimation. The paper addresses these concerns using a quasi-maximum likelihood approach and a generalized estimator for the production function. It produces unbiased estimates of the impact of regulation on markups and productivity. The paper therefore proposes a work-around solution for the identification problem identified in Bond, Hashemi, Kaplan and Zoch (2020), and an unbiased measure of productivity, by directly accounting for the joint impact of regulation on markups and productivity. 2021-01-28T15:34:04Z 2021-01-28T15:34:04Z 2021-01 Working Paper http://documents.worldbank.org/curated/en/560821611247482947/Identification-Properties-for-Estimating-the-Impact-of-Regulation-on-Markups-and-Productivity http://hdl.handle.net/10986/35070 English Policy Research Working Paper;No. 9523 CC BY 3.0 IGO http://creativecommons.org/licenses/by/3.0/igo World Bank World Bank, Washington, DC Publications & Research Publications & Research :: Policy Research Working Paper |
| repository_type |
Digital Repository |
| institution_category |
Foreign Institution |
| institution |
Digital Repositories |
| building |
World Bank Open Knowledge Repository |
| collection |
World Bank |
| language |
English |
| topic |
PRODUCTIVITY MARKUPS REGULATION PRODUCTION FUNCTION MARKOV PROCESS QUASI-MAXIMUM LIKELIHOOD COMPETITION POLICY |
| spellingShingle |
PRODUCTIVITY MARKUPS REGULATION PRODUCTION FUNCTION MARKOV PROCESS QUASI-MAXIMUM LIKELIHOOD COMPETITION POLICY Sampi, James Jooste, Charl Vostroknutova, Ekaterina Identification Properties for Estimating the Impact of Regulation on Markups and Productivity |
| relation |
Policy Research Working Paper;No. 9523 |
| description |
This paper addresses several
shortcomings in the productivity and markup estimation
literature. Using Monte-Carlo simulations, the analysis
shows that the methods in Ackerberg, Caves and Frazer (2015)
and De Loecker and Warzynski (2012) produce biased estimates
of the impact of policy variables on markups and
productivity. This bias stems from endogeneity due to the
following: (1) the functional form of the production
function; (2) the omission of demand shifters; (3) the
absence of price information; (4) the violation of the
Markov process for productivity; and (5) misspecification
when marginal costs are excluded in the estimation. The
paper addresses these concerns using a quasi-maximum
likelihood approach and a generalized estimator for the
production function. It produces unbiased estimates of the
impact of regulation on markups and productivity. The paper
therefore proposes a work-around solution for the
identification problem identified in Bond, Hashemi, Kaplan
and Zoch (2020), and an unbiased measure of productivity, by
directly accounting for the joint impact of regulation on
markups and productivity. |
| format |
Working Paper |
| author |
Sampi, James Jooste, Charl Vostroknutova, Ekaterina |
| author_facet |
Sampi, James Jooste, Charl Vostroknutova, Ekaterina |
| author_sort |
Sampi, James |
| title |
Identification Properties for Estimating the Impact of Regulation on Markups and Productivity |
| title_short |
Identification Properties for Estimating the Impact of Regulation on Markups and Productivity |
| title_full |
Identification Properties for Estimating the Impact of Regulation on Markups and Productivity |
| title_fullStr |
Identification Properties for Estimating the Impact of Regulation on Markups and Productivity |
| title_full_unstemmed |
Identification Properties for Estimating the Impact of Regulation on Markups and Productivity |
| title_sort |
identification properties for estimating the impact of regulation on markups and productivity |
| publisher |
World Bank, Washington, DC |
| publishDate |
2021 |
| url |
http://documents.worldbank.org/curated/en/560821611247482947/Identification-Properties-for-Estimating-the-Impact-of-Regulation-on-Markups-and-Productivity http://hdl.handle.net/10986/35070 |
| _version_ |
1764482256794025984 |