Productivity Dynamics in Manufacturing Plants

Charles Hulten,

CH

Charles Hulten University of Maryland

David Campbell, and

DC

David Campbell University of Maryland

Martin Neil Baily

Martin Neil Baily Senior Fellow Emeritus - Economic Studies, Center on Regulation and Markets

Discussants: Richard E. Caves and

REC

Richard E. Caves Harvard University

Timothy F. Bresnahan

TFB

Timothy F. Bresnahan Stanford University

MUCH OF THE TRADITIONAL analysis of productivity growth in manufacturing industries has been based explicitly or implicitly on a model in which identical, perfectly competitive plants respond in the same way to forces that strike the industry as a whole. The estimates of growth obtained with this framework are then used as the basis for discussions of policy concerning capital accumulation, research and development, trade, or other issues. This contrasts markedly with the literature of industrial organization in which perfect competition is seen as an unusual market structure and in which the differences among firms are examined in detail. The models of oligopoly that are the staple of the industrial organization literature are then used to examine antitrust policy.