摘要：A startling fact of firm level productivity analysis is the large and persistent
differences in both labour productivity and total factor productivity (TFP)
between firms in narrowly defined sectoral classes. The competitiveness of an
industry is potentially an important factor explaining this productivity
dispersion. The degree of competition has also implications for the measurement
of TFP at the firm level. This paper firstly develops a novel control function
approach to production function and TFP estimation explicitly taking imperfect
competition into account. This addresses a number of issues with the control
function approach to productivity estimation. Secondly, applying this new
approach to UK data it shows that productivity dispersion on average is about 50
percent higher than with standard TFP measures. It also shows that accounting
for imperfect competition matters for estimates of the persistence of TFP.
Thirdly, the paper finds a negative relationship between competition and
productivity dispersion
