Total-factor spillovers, similarities, and competitions in the petroleum industry

Abstract

This article investigates multi-dimensional spillovers, similarities, and competitions in the petroleum industry. Spatial techniques are applied first in production function in order to observe the cross-sectional dependence in each of the four dimensions (product-, technology-, segment-, and region-wide). These four single-dimensional spatial models are then aggregated by a model averaging method that assigns weights to different models based on their ability to explain data. Taking all dependences into consideration, this article estimates the total-factor spillovers, similarities, and competitions in the spirit of total-factor productivity. Negative spillover effects are observed in all the four dimensions. Moreover, segment-wide competition has negative effect on productivity. Some policy implications concerning human capital, globalization, and development strategies are also discussed.