Abstract
In Japan, TFP downturn tendency has been observed in the construction industry. It is said that TFP captures technical change level. However, it is considered that technology is not easy to decrease so rapidly. The purpose of this paper is to find out the reason why TFP has decreased contrary to the expectation. We focused on deflator. In fact, in the construction industry, the deflator for output price is based on the deflator for input price because there are no proper price index for TFP calculation. Therefore, it couldn’t adjust the output price decreasing that was caused by mark-ups decreasing due to the introducing of general competitive bidding. An econometrics result clearly showed that introducing of general competitive bidding brought TFP decreasing due to mark-ups decreasing.
