The capacity productivity change and the variable input productivity change: A new decomposition of the Malmquist productivity index

This paper provides a method for the decomposition of total factor productivity into partial measures of productivity. The proposed decomposition model measures the capacity productivity change and variable input productivity change. The latter can further be decomposed into partial factor technical efficiency change and partial factor technical change. This new decomposition isolates various sources of total factor productivity, and avoids providing a misleading indication of overall productivity.