An Indirect Approach to Measuring Productivity in Private Services

Produclivity measurement is considered in the context of incomplete output information. Only a value measure of output is assumed to be available, which is typical for many service industries. Input markets are assumed to be competitive, while the output market is allowed to be noncompetitive, and potential markups are assumed to be either known or constant. It is shown that if production technologies are homothetic and the elasticities of total costs with respect to output are strictly increasing, the given data are equivalent to complete information, provided the markup is known. If it is not. the results hold conditional on the unknown markup.