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Information Technology, Productivity and Asset Ownership: Evidence from Taxicab Fleets

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Document pages: 38 pages

Abstract: This paper develops a simple model that links the adoption of a productivity-enhancing technology to increased vertical integration and a less skilled workforce. We test the model’s key prediction using novel micro data on vehicle ownership patterns from the Economic Census during a period when computerized dispatching systems were first adopted by taxicab firms. Controlling for time-invariant firm-specific effects, firms increase the proportion of taxicabs under fleet-ownership by 12 percent when they adopt new computerized dispatching systems. Using increasingly stringent econometric tests, we verify that the baseline tests are indicative of a casual relationship between dispatching technology adoption and vertical integration. These findings suggest that increasing a firm’s productivity can lead to increased vertical integration, even in the absence of asset specificity.

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