Comparing total factor productivity and price performance - Concepts and application to Canadian railways

Productivity is normally measured by output-input comparisons, either with index numbers or as a shift in an econometric cost (or production) function . Productivity enables output price increases to be less than the increases in input prices. The link between productivity, prices and profitability h as been recognised in the management literature, but little attention has b een paid to it in the economics literature. In this paper the links between productivity and price performance are examined using data derived from in dex-number studies and illustrated for Canadian railways 1956-95.