While there are a lot of methods one can think of, like computing the ratio of profits to assets or profits to sales, apparently it is a difficult problem.

It would be useful to know how effectively are firms using their inputs in a marginal or an average sense, say by looking at the cost of labor, capital inputs, electricity, etc, and comparing that with the output of a plant or a firm.

Some methods assume a Cobb'Douglas function and also assume which factors are fixed and which are variable over which periods, etc. Is there a typically accepted method yet?

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    $\begingroup$ Olley and Pakes, “The Dynamics of Productivity in the Telecommunications Equipment Industry,” (1996) is the standard reference for TFP. $\endgroup$ – Anton Tarasenko Jun 1 '16 at 10:33
  • $\begingroup$ Thanks @Anton Tatasenko. Since that was in 1996, I'm wondering if there is something newer or if there is a consensus about the ability of that method to actually recover productivity. $\endgroup$ – Fix.B. Jun 1 '16 at 14:36
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    $\begingroup$ Before computing anything, it would be helpful to first define "firm's productivity". Then this definition would be the one to guide empirical implementation. $\endgroup$ – Alecos Papadopoulos Jun 1 '16 at 15:09

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