TY - JOUR
T1 - Capital resalability, productivity dispersion, and market structure
AU - Balasubramanian, Natarajan
AU - Sivadasan, Jagadeesh
N1 - Copyright:
Copyright 2009 Elsevier B.V., All rights reserved.
PY - 2009/8
Y1 - 2009/8
N2 - We propose an industry-level index of capital resalability-the share of used capital in aggregate industry capital expenditure-that relates (inversely) to sunkenness of investments. Using data from U.S. manufacturing, we then test the effect of capital resalability on industry productivity dispersion, mean productivity, and industry concentration. As predicted by standard models of industry equilibrium with heterogeneous firms, we find that increases in capital resalability are associated with a reduction in productivity dispersion, and an increase in the mean and median of the productivity distribution. Furthermore, we find that capital resalability is negatively correlated with industry concentration.
AB - We propose an industry-level index of capital resalability-the share of used capital in aggregate industry capital expenditure-that relates (inversely) to sunkenness of investments. Using data from U.S. manufacturing, we then test the effect of capital resalability on industry productivity dispersion, mean productivity, and industry concentration. As predicted by standard models of industry equilibrium with heterogeneous firms, we find that increases in capital resalability are associated with a reduction in productivity dispersion, and an increase in the mean and median of the productivity distribution. Furthermore, we find that capital resalability is negatively correlated with industry concentration.
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U2 - 10.1162/rest.91.3.547
DO - 10.1162/rest.91.3.547
M3 - Article
AN - SCOPUS:70349204506
SN - 0034-6535
VL - 91
SP - 547
EP - 557
JO - Review of Economics and Statistics
JF - Review of Economics and Statistics
IS - 3
ER -