Sales and Markup Dispersion: Theory and Empirics

  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},
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
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