2007
DOI: 10.1002/jae.995
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Complementarities in automobile production

Abstract: SUMMARYThe number of different car and light truck models produced in North America has increased enormously over the last decades. The data suggests that producing this increased variety of vehicles is associated with a productivity penalty. We show that manufacturers can adopt complementary activities to reduce this penalty. Flexible technology, defined as the ability to assemble models derived from different 'platforms' on the same assembly line, and bringing previously outsourced activities in-house are tw… Show more

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Cited by 39 publications
(17 citation statements)
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“…Essentially, we need instrumental variables for at least one of the practices (e.g. Van Biesebroeck, 2007), but this is hard to obtain as it is unclear what such an instrument would be -how could it be legitimately excluded from the second stage equation? In classical factor demand analysis we would examine the cross price effects to gauge the existence of Hicks-Allen complements versus substitutes, i.e.…”
Section: Complementaritiesmentioning
confidence: 99%
“…Essentially, we need instrumental variables for at least one of the practices (e.g. Van Biesebroeck, 2007), but this is hard to obtain as it is unclear what such an instrument would be -how could it be legitimately excluded from the second stage equation? In classical factor demand analysis we would examine the cross price effects to gauge the existence of Hicks-Allen complements versus substitutes, i.e.…”
Section: Complementaritiesmentioning
confidence: 99%
“…Additionally, our results above might still be subject to reverse causation. In order to explicitly account for potential endogeneity of mobile ICT in the production function, we perform an instrumental variable regression (IV) (Athey and Stern, 1998;Biesebroeck, 2007). In general, finding instrumental variables, which affect the firms' output only through the potentially endogenous ICT input, is challenging.…”
Section: Instrumental Variable Estimationmentioning
confidence: 99%
“…We need an instrumental variable for one of the practices (e.g. Van Biesebroeck, 2007), but this is hard to obtain as it is unclear what such an instrument would be, i.e. could it be legitimately excluded from the second stage equation?…”
Section: Complementarities Between Organizational Practicesmentioning
confidence: 99%