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Production Factor Returns: The Role of Factor Utilization

Abstract : Short-term increasing returns to production factors are usually found in empirical studies. We argue they can be due to omitted variables, particularly the intensity of factor utilization. Thanks to original French firm-level data (1992–2008), we show how increasing returns to scale disappear when working time, capacity utilization rate, and, particularly, capital operating time are introduced in the production function.
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https://hal-amu.archives-ouvertes.fr/hal-01507167
Contributor : Elisabeth Lhuillier <>
Submitted on : Wednesday, April 12, 2017 - 4:24:56 PM
Last modification on : Wednesday, August 5, 2020 - 3:12:00 AM

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Gilbert Cette, Nicolas Dromel, Rémy Lecat, Anne-Charlotte Paret. Production Factor Returns: The Role of Factor Utilization. Review of Economics and Statistics, Massachusetts Institute of Technology Press (MIT Press), 2015, 97 (1), pp.134-143. ⟨10.1162/REST_a_00434⟩. ⟨hal-01507167⟩

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