The Dynamics of Productivity in the Telecommunications Equipment Industry

Cobb Douglas production function

Capital $k_{t+1} = (1-\delta)k_t + i_t$, and age $a_{t+1} = a_t + 1$.

Production function is written as $$y_{i,t} = \beta_0 + \beta_a a_{i,t} + \beta_k k_{i,t} + \beta_l l_{i,t} + w_{i,t} + \eta_{i,t},$$ where $y_{i,t}$ is the log output from plant $i$, $k$ is log capital input $l$ is log labor input, $w$ is the plant’s productivity,