Productivity and its Decomposition in the Japanese Broadcasting Market

Abstract

The purpose of this paper is to calculate the total factor productivity (TFP) as well as scale economies of Japanese terrestrial broadcasters and examine the industry’s characteristics through the decomposition of TFP growth. In order to calculate TFP growth rate, a variable cost function is estimated using data on twenty-five broadcasters for the period 1997–2002, and the TFP growth rate is decomposed into three sources: output effect, capital adjustment and technical change. Calculation reveals that a decrease in output causes low TFP growth. However, TFP growth is observed to improve through technical advances, although the rate of technical change in broadcasting is generally low. Furthermore, the average rate of technical change among small-scale broad-casters is smaller than that of large-scale broadcasters.