Abstract
AbstractA striking feature of microlevel plant data is the presence of significant variation in factor cost shares across plants within an industry. We develop a methodology based on cluster analysis to decompose cost shares into idiosyncratic and group‐specific components. We apply our methodology to Chilean plant‐level data and find that group‐specific variation accounts for approximately one‐third of the variation in cost shares. We study the implications of these groups in cost shares on the gains from eliminating misallocation. We place bounds on their importance and find that ignoring them can overstate the gains from eliminating misallocation by up to one‐third .
Published Version
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Schedule a callDisclaimer: All third-party content on this website/platform is and will remain the property of their respective owners and is provided on "as is" basis without any warranties, express or implied. Use of third-party content does not indicate any affiliation, sponsorship with or endorsement by them. Any references to third-party content is to identify the corresponding services and shall be considered fair use under The CopyrightLaw.
