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. Review of Industrial Organization Springer Journals

The Pin Factory Revisited: Product Diversification and Productivity Growth

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Kluwer Academic Publishers
Copyright © 1997 by Kluwer Academic Publishers
Economics; Industrial Organization; Microeconomics
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