SMU SOE Seminar (Apr 10, 2017): Sales and Markup Dispersion: Theory and Empirics

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ABSTRACT 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, log-normal, and Frechet), the distributions of productivity and output 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; and we find that, to explain sales and markups, the choice between Pareto and log-normal productivity distributions matters less than the choice between CREMR and other demands. Keywords: CREMR Demands; Heterogeneous Firms; Kullback-Leibler Divergence; Log-Normal Distribution; Pareto Distribution. JEL Classication: F15, F23, F12 Click here to view the paper. Click here to view the CV.
		PRESENTER Mathieu Parenti Universite Libre de Bruxelles
		RESEARCH FIELDS International Trade Industrial Organization
		DATE: 10 Apr 2017 (Monday)
		TIME: 4pm - 5.30pm
		VENUE: Meeting Room 5.1, Level 5 School of Economics Singapore Management University 90 Stamford Road Singapore 178903