The Pin Factory Revisited: Product Diversification and Productivity Growth

The Pin Factory Revisited: Product Diversification and Productivity Growth Manufacturing plants have been producing an increasingly homogeneous product mix over recent years. Individual plants have been manufacturing fewer and less dissimilar products. The trend is ubiquitous across industries and is unlikely to be a random event. An index of product diversification is introduced into a fixed-effects model of productivity growth derived formally from a factor-minimal cost function. Specialization at the production site is found to have spurred productivity growth. Over the 1963–87 period, decreasing product heterogeneity has accounted for about 17 percent of productivity growth in U.S. manufacturing, second in importance only to technical change and equaling the contribution of scale economies. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Review of Industrial Organization Springer Journals

The Pin Factory Revisited: Product Diversification and Productivity Growth

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Publisher
Springer Journals
Copyright
Copyright © 1997 by Kluwer Academic Publishers
Subject
Economics; Industrial Organization; Microeconomics
ISSN
0889-938X
eISSN
1573-7160
D.O.I.
10.1023/A:1007726012218
Publisher site
See Article on Publisher Site

Abstract

Manufacturing plants have been producing an increasingly homogeneous product mix over recent years. Individual plants have been manufacturing fewer and less dissimilar products. The trend is ubiquitous across industries and is unlikely to be a random event. An index of product diversification is introduced into a fixed-effects model of productivity growth derived formally from a factor-minimal cost function. Specialization at the production site is found to have spurred productivity growth. Over the 1963–87 period, decreasing product heterogeneity has accounted for about 17 percent of productivity growth in U.S. manufacturing, second in importance only to technical change and equaling the contribution of scale economies.

Journal

Review of Industrial OrganizationSpringer Journals

Published: Sep 29, 2004

References

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