Theory and Practice of TFP Estimation: The Control Function Approach Using Stata

2017 ◽  
Author(s):  
Vincenzo Mollisi ◽  
Gabriele Rovigatti
Keyword(s):  
Control Function ◽  
Theory And Practice ◽  
Function Approach ◽  
Control Function Approach

scholarly journals Theory and Practice of Total-Factor Productivity Estimation: The Control Function Approach using Stata

2018 ◽  
Vol 18 (3) ◽  
pp. 618-662 ◽  
Author(s):  
Gabriele Rovigatti ◽  
Vincenzo Mollisi
Keyword(s):  
Production Function ◽  
Method Of Moments ◽  
Control Function ◽  
Generalized Method Of Moments ◽  
Theory And Practice ◽  
Function Approach ◽  
Function Estimation ◽  
Control Function Approach ◽  
Production Function Estimation ◽  
Two Step Estimation

Alongside instrumental-variables and fixed-effects approaches, the control function approach is the most widely used in production function estimation. Olley and Pakes (1996, Econometrica 64: 1263–1297), Levinsohn and Petrin (2003, Review of Economic Studies 70: 317–341), and Ackerberg, Caves, and Frazer (2015, Econometrica 83: 2411–2451) have all contributed to the field by proposing two-step estimation procedures, whereas Wooldridge (2009, Economics Letters 104: 112–114) showed how to perform a consistent estimation within a single-step generalized method of moments framework. In this article, we propose a new estimator based on Wooldridge's estimation procedure, using dynamic panel instruments à la Blundell and Bond (1998, Journal of Econometrics 87: 115–143), and we evaluate its performance by using Monte Carlo simulations. We also present the new command prodest for production function estimation, and we show its main features and strengths in a comparative analysis with other community-contributed commands. Finally, we provide evidence of the numerical challenges faced when using the Olley–Pakes and Levinsohn–Petrin estimators with the Ackerberg–Caves–Frazer correction in empirical applications, and we document how the generalized method of moments estimates vary depending on the optimizer or starting points used.

scholarly journals Local Government Cooperation at Work: A Control Function Approach

2014 ◽  
Author(s):  
Zineb Abid ◽  
Edoardo Di Porto ◽  
Angela Parenti ◽  
Sonia Paty
Keyword(s):  
Local Government ◽  
Control Function ◽  
Function Approach ◽  
Control Function Approach

Demand Estimation Using Managerial Responses to Automated Price Recommendations

2022 ◽  
Author(s):  
Daniel Garcia ◽  
Juha Tolvanen ◽  
Alexander K. Wagner
Keyword(s):  
Control Function ◽  
Price Change ◽  
Decision Makers ◽  
Function Approach ◽  
Difference In Differences ◽  
Price Variation ◽  
Data Set ◽  
Demand Elasticities ◽  
Price Adjustments ◽  
Control Function Approach

We provide a new framework to identify demand elasticities in markets where managers rely on algorithmic recommendations for price setting and apply it to a data set containing bookings for a sample of midsized hotels in Europe. Using nonbinding algorithmic price recommendations and observed delay in price adjustments by decision makers, we demonstrate that a control-function approach, combined with state-of-the-art model-selection techniques, can be used to isolate exogenous price variation and identify demand elasticities across hotel room types and over time. We confirm these elasticity estimates with a difference-in-differences approach that leverages the same delays in price adjustments by decision makers. However, the difference-in-differences estimates are more noisy and only yield consistent estimates if data are pooled across hotels. We then apply our control-function approach to two classic questions in the dynamic pricing literature: the evolution of price elasticity of demand over and the effects of a transitory price change on future demand due to the presence of strategic buyers. Finally, we discuss how our empirical framework can be applied directly to other decision-making situations in which recommendation systems are used. This paper was accepted by Omar Besbes, revenue management and market analytics.

scholarly journals Local government cooperation at work: a control function approach

2016 ◽  
pp. lbw008 ◽  
Author(s):  
Edoardo Di Porto ◽  
Angela Parenti ◽  
Sonia Paty ◽  
Zineb Abidi
Keyword(s):  
Local Government ◽  
Control Function ◽  
Function Approach ◽  
Control Function Approach
Sign in / Sign up

Export Citation Format

Share Document