Total factor productivity measures for Telstra

Abstract

Using the Divisia indexation procedure to construct output and input indices for Telstra, this study estimated total factor productivity (TFP) growth rates for the period, 1980–1997. The study reveals that Telstra's TFP growth rates were significantly higher in the post-reform period compared to the pre-reform period. The study further reveals that the terms of trade for Telstra, defined as the ratio of output prices received and input prices paid by Telstra, has declined more sharply in recent years. This reflects Telstra's endeavour, under the competitive pressure, to share productivity gains with consumers.