This paper examines the dynamics of productivity in the telecommunications equipment industry over the past two decades, focusing on the impact of technological change and deregulation. The authors estimate a production function for the industry and analyze the evolution of plant-level productivity. They find that deregulation led to a significant increase in industry productivity growth, despite no increase in the average productivity growth rate of plants. This growth was driven by a reallocation of capital to more productive establishments, rather than an increase in the efficiency of variable factor allocation. The study uses a semiparametric estimation technique to address the issues of selection and simultaneity, which are common in traditional estimation procedures. The results highlight the importance of micro-level analysis in understanding the complex dynamics of industry restructuring and productivity changes.This paper examines the dynamics of productivity in the telecommunications equipment industry over the past two decades, focusing on the impact of technological change and deregulation. The authors estimate a production function for the industry and analyze the evolution of plant-level productivity. They find that deregulation led to a significant increase in industry productivity growth, despite no increase in the average productivity growth rate of plants. This growth was driven by a reallocation of capital to more productive establishments, rather than an increase in the efficiency of variable factor allocation. The study uses a semiparametric estimation technique to address the issues of selection and simultaneity, which are common in traditional estimation procedures. The results highlight the importance of micro-level analysis in understanding the complex dynamics of industry restructuring and productivity changes.