CPR Working Paper Series No. 87
Fixed-Effect Estimation of Highly-Mobile
Production Technologies
William C. Horrace and Kurt E. Schnier
April 2008
[Revised from November 2006 and July 2007]
Abstract:
We consider fixed-effect estimation of a production function where inputs and outputs vary over time, space, and cross-sectional unit. Variability in the spatial dimension allows for time-varying individual effects, without parametric assumptions on the effects. Asymptotics along the spatial dimension provide consistency and normality of the marginal products. A finite-sample example is provided: a production function for bottom-trawler fishing vessels in the flatfish fisheries of the Bering Sea. We find significant spatial variability of output (catch) which we exploit in estimation of a harvesting function.
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