Why Is Productivity Correlated With Competition?

• 成果类型: Article
• 署名作者: Backus, Matthew
• 署名单位: Columbia University
• 刊物名称: ECONOMETRICA
• ISSN/ISSBN: 0012-9682
• DOI: 10.3982/ECTA12926
• 发表日期: 2020
• 页码: 2415-2444
• 关键词: FIRM TURNOVER; market power; EFFICIENCY; DYNAMICS; TRADE; IMPACT; entry; EXIT; US; reallocation

摘要

The correlation between productivity and competition is an oft observed but incompletely understood result. Some suggest that there is a treatment effect of competition on measured productivity, for example, through a reduction of managerial slack. Others argue that greater competition makes unproductive establishments exit by reallocating demand to their productive rivals, raising observed average productivity via selection. I study the ready-mix concrete industry and offer three perspectives on this ambivalence. First, using a standard decomposition approach, I look for evidence of greater reallocation of demand to productive plants in more competitive markets. Second, I model the establishment exit decision and construct a semiparametric selection correction to quantify the empirical significance of treatment and selection. Finally, I use a grouped instrumental variable quantile regression to test the distributional predictions of the selection hypothesis. I find no evidence for greater selection or reallocation in more competitive markets; instead, all three results suggest that measured productivity responds directly to competition. Potential channels include specialization and managerial inputs.