Efficiency in U.S. Manufacturing Industries

By David Barton and Richard E. Caves

Among studies of efficiency that have been conducted over the past three decades, Efficiency in U.S. Manufacturing Industries is unmatched in the breadth and depth of its coverage.

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Summary

Among studies of efficiency that have been conducted over the past three decades, Efficiency in U.S. Manufacturing Industries is unmatched in the breadth and depth of its coverage.

Using the recently developed stochastic frontier production function, Richard Caves and David Barton estimate the degree of technical efficiency in nearly 350 U.S. manufacturing industries and explain the variation in efficiency among industries. They reach a number of strong conclusions, including the observation that import competition and flexible employment arrangements are beneficial whereas corporate diversification hurts efficiency.Caves and Barton describe and evaluate the stochastic frontier production function, which allows them to credibly estimate technical inefficiency. Using U.S. Census data on individual manufacturing establishments, they obtain the frontier production functions for over 300 industries. They then propose hypotheses derived from modern developments in economic analysis and theory which explain differences in efficiency. The hypotheses embrace many dimensions of competition and economic organization (both enterprise and labor), as well as sources of heterogeneous productivity levels such as capital-vintage differences, product differentiation, and differential rents to innovationAmong studies of efficiency that have been conducted over the past three decades, Efficiency in U.S. Manufacturing Industries is unmatched in the breadth and depth of its coverage. The hypotheses tested range more widely, and the analysis is extended to cover differences in efficiency among small and large firms and in the dynamic effects of efficiency differences on industries' rates of productivity growth. The review of the existing literature is unusually complete.

Hardcover

Out of Print ISBN: 9780262031578 204 pp. |

Endorsements

  • This new book by Richard Caves and David Barton presents a host of finding that will be of interest to economists (and others) concerned with the efficiency of the American economy.

    Edwin Mansfield

    Director, Center for Economics and Technology, and Professor of Economics, University of Pennsylvania

  • This represents the most comprehensive analysis to date of technical efficiency in manufacturing and of the factors which explain the variation among industries in efficiency. The study covers nearly 350 industries, and the hypotheses tested range more widely than in any previous study. It is likely to be the standard reference in this area for many years; it is must reading for those interested in technical efficiency but is useful and accessible also to a much wider audience of empirically oriented micro economists.

    Bo Carlsson

    Umstattd Professor of Industrial Economics Case Western Reserve University