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UID:f4fe8e031c3f96745111c6cd4a445da2
CATEGORIES:Seminars
CREATED:20211011T105128
SUMMARY:WEBINAR: Dave Donaldson - MIT
DESCRIPTION;ENCODING=QUOTED-PRINTABLE:\n\nMisallocation in Firm Production: A Nonparametric Test Using Procuremen
 t Lotteries” with Paul Carrillo (GWU), Dina Pomeranz (U Zurich) and Monica 
 Singhal (UC Davis)\nAbstract: \nIs there misallocation in firm production, 
 as we might expect to result from market power, contracting constraints, ta
 xes, regulations, corruption, or other potential distortions? And wher
 e there is misallocation, how severe are its resulting welfare consequ
 ences? In this paper we propose a new test for allocative efficiency of pro
 duction (AEP) that proceeds without restrictions on firms' production 
 technologies, demand, market structure, or optimizing behavior. We also&nbs
 p;develop a new procedure to quantify losses from misallocation via a nonpa
 rametric instrumental variable random coefficient model. Both procedur
 es exploit exogenous shocks that induce some firms to alter their input use
  and then measure the average level of, and cross-firm dispersion in, 
 the rate at which firms’ output value increases, on the margin, for a 
 given increase in inputs. We apply these results to a setting in which thou
 sands of firms experience exogenous demand shocks due to lottery-based
  assignment of public procurement contracts for construction services in&nb
 sp;Ecuador. Using administrative data on these firms, a randomization infer
 ence version of our test rejects the null of AEP but the welfare losse
 s resulting from this misallocation are only 1% relative to the first-best.
  Standard parametric assumptions applied to the same setting would sug
 gest losses that are an order of magnitude larger. \n
DTSTAMP:20260507T231837Z
DTSTART:20220324T163000Z
DTEND:20220324T173000Z
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