Sales and Markup Dispersion: Theory and Empirics

@article{Mrzov2017SalesAM,
  title={Sales and Markup Dispersion: Theory and Empirics},
  author={Monika Mr{\'a}zov{\'a} and J. Peter Neary and Mathieu Parenti},
  journal={International Political Economy: Investment \& Finance eJournal},
  year={2017}
}
We derive exact conditions relating the distributions of firm productivity, sales, output, and markups to the form of demand; in particular, for a large family (including Pareto, lognormal, and Frechet), the distributions of productivity and sales are the same if and only if demand is "CREMR'' (Constant Revenue Elasticity of Marginal Revenue). We then use the Kullback-Leibler Divergence to quantify the information loss when a predicted distribution fails to match the actual one; empirically, to… Expand
Economic Distributions, Primitive Distributions, and Demand Recovery in Monopolistic Competition
We link fundamental technological and taste distributions to endogenous economic distributions of prices and firm size (output, profit) generated under monopolistic competition with heterogeneousExpand
Economic distributions and primitive distributions in monopolistic competition
We link fundamental technological and taste distributions to endogenous economic distributions of firm size (output, profit) and prices in extensions of canonical IO and Trade models. We develop aExpand
Decoupling the Ces Distribution Circle with Quality and Beyond: Equilibrium Distributions and the Ces-Logit Nexus
We show for CES demands with heterogeneous productivities that profit, revenue and output distributions lie in the same closed power family as the productivity distribution (e.g., the ‘ParetoExpand
The CES distribution circle and its decoupling
We show for CES demands with heterogeneous production costs that profit, revenue, and output distributions lie in the same class as the productivity distribution (e.g., the "Pareto circle"), althoughExpand
Some unpleasant markup arithmetic: Production function elasticities and their estimation from production data
Abstract The ratio estimator of the markup is the ratio of the output elasticity for a flexible input to that input’s cost share in total revenue. We highlight identification and estimation issuesExpand
Quality Heterogeneity and Misallocation: The Welfare Benefits of Raising your Standards
Inefficient allocation of production across heterogeneous firms is a major source of welfare loss, but frameworks generally ignore policies that reduce the misallocation. We study the welfare effectsExpand
On a class of statistical distance measures for sales distribution
While firm-level and micro issue analysis become an important part in research of international trade, only a few work is concerned about the goodness-of-fit for size distribution of firms. In thisExpand
Production Clustering and Offshoring
I propose a simple and computationally feasible algorithm to solve a firm’s problem for a large class of sequential production models of offshoring. These models allow for production chain of anyExpand
Nonhomothetic Preferences and Rent Sharing in an Open Economy
We develop a framework for studying how differences in the level and/or dispersion of per-capita income affect trade structure and welfare in a two-country model. Thereby, we embed nonhomotheticExpand
Markups and Productivity under Heterogeneous Financial Frictions
We incorporate heterogeneous financial frictions in a setting of monopolistically competitive firms with endogenous markups. Before producing, firms must pledge collateral to obtain a bank loan,Expand
...
1
2
3
4
...

References

SHOWING 1-10 OF 117 REFERENCES
The Elusive Pro-Competitive Effects of Trade
We study the pro-competitive effects of international trade, or lack thereof, in models with monopolistic competition, firm-level heterogeneity, and variable markups. Under standard restrictions onExpand
Powerless: gains from trade when firm productivity is not Pareto distributed
Most trade models featuring heterogeneous firms assume a Pareto productivity distribution, on the basis that it provides a reasonable representation of the data and because of its analyticalExpand
A Tale of Two Tails: Productivity Distribution and the Gains from Trade
I use firm-level data to show that neither the Log-normal nor the Pareto distribution can approximate the shape of the productivity distribution along the entire support. While the formerExpand
Selection, Growth, and the Size Distribution of Firms
This paper describes an analytically tractable model of balanced growth that is consistent with the observed size distribution of firms. Growth is the result of idiosyncratic firm productivityExpand
Monopolistic Competition: Beyond the Constant Elasticity of Substitution
We propose a model of monopolistic competition with additive preferences and variable marginal costs. Using the concept of “relative love for variety,” we provide a full characterization of theExpand
Interpretations of Departures from the Pareto Curve Firm-Size Distributions
Empirical firm-size data show concavity when size is plotted against rank (largest firm = rank 1) on a log-log scale, a departure from the Pareto distribution which shows a straight line. Two reasonsExpand
Monopolistic competition: CES redux?
We study the competitive and reallocation effects of trade opening in monopolistic competition. To this purpose, we generalize the Melitz (2003) setup with heterogeneous firms and fixed and variableExpand
Trade, Markup Heterogeneity and Misallocations
Markups vary widely across industries and countries, their heterogeneity has increased overtime and asymmetric exposure to international trade seems partly responsible for this phenomenon. In thisExpand
Monopolistic competition and optimum product diversity
Pettengill tests whether there is an excessive number of firms in a monopolistically competitive equilibrium by a device of considerable expository merit. He removes one firm, and redistributes theExpand
Prices, Markups and Trade Reform
This paper examines how prices, markups and marginal costs respond to trade liberalization. We develop a framework to estimate markups from production data with multi-product firms. This approachExpand
...
1
2
3
4
5
...