Policy Research Domains (Major Policy Research Domains) II. Promoting Innovation and Strengthening International Competitiveness

Differentiated Services and Productivity: Productivity analysis based on a monopolistic competition model

Project Leader/Sub-Leader

KATO Atsuyuki

KATO Atsuyuki Fellow



2008 - 2010

The theme of this project is the "analysis of the productivity of firms providing differentiated services." Productivity research based on firm - and business establishment-level data normally uses sales (or value-added computed from sales) as the output and an industry-level deflator. This is because product-level data on production volumes and prices is hardly obtainable due to statistical limitations. These limitations are particularly restricting in service industries because of the difficulty in quantitatively defining production volumes. Moreover, the impact of product (service) diversification on the estimation of productivity is ignored. Furthermore, because estimated productivity fluctuation includes markups and demand shocks (changes in consumer preferences, etc. on the firm level), such estimates may not correspond with productivity fluctuations in the strict sense. In light of these problems, this project focuses on the following objectives:

  • (1) Productivity estimation by using a model that explicitly incorporates product (service) differentiation under the actual limitations on the usage of price and volume data for individual products (services).
  • (2) The results obtained will be compared with results from prior research (on economies of scale, productivity dynamics, etc.), and the effects of corporate characteristics and strategies and industrial policies will be analyzed.

June 23, 2008 - June 3, 2010

Major Research Results