scholarly journals Sales and Markup Dispersion: Theory and Empirics

Econometrica ◽  
2021 ◽  
Vol 89 (4) ◽  
pp. 1753-1788 ◽  
Author(s):  
Monika Mrázová ◽  
J. Peter Neary ◽  
Mathieu Parenti
Keyword(s):  
Demand Function ◽  
Structural Model ◽  
Monopolistic Competition ◽  
Heterogeneous Firms ◽  
Dispersion Theory ◽  
Firm Level ◽  
Level Data ◽  
Indian Firm ◽  
Necessary And Sufficient ◽  
The Relationship

We characterize the relationship between the distributions of two variables linked by a structural model. We then show that, in models of heterogeneous firms in monopolistic competition, this relationship implies a new demand function that we call “CREMR” (Constant Revenue Elasticity of Marginal Revenue). This demand function is the only one that is consistent with productivity and sales distributions having the same form (whether Pareto, lognormal, or Fréchet) in the cross section, and it is necessary and sufficient for Gibrat's Law to hold over time. Among the applications we consider, we use our methodology to characterize misallocation across firms; we derive the distribution of markups implied by any assumptions on demand and productivity; and we show empirically that CREMR‐based markup distributions provide an excellent parsimonious fit to Indian firm‐level data, which in turn allows us to calculate the proportion of firms that are of suboptimal size in the market equilibrium.

scholarly journals The formation of Coasean institutions to provide university knowledge for innovation: a case study and econometric evidence for Switzerland

2020 ◽  
Author(s):  
Dominique Foray ◽  
Martin Woerter
Keyword(s):  
Innovation Performance ◽  
Institutional Setting ◽  
Firm Level ◽  
General Validity ◽  
Level Data ◽  
Econometric Evidence ◽  
Innovative Products ◽  
Type Of Institution ◽  
The Relationship

Abstract “Coasean” institutions are an alternative institutional form that provides a solution to some market and coordination failures. As such they can weaken considerably the case for public subsidies in a vast range of context. They are “market-based” and an inexpensive way to address the public good issues of R&D. They are, however, a largely overlooked institutional option. Early theoretical notions emphasize the advantages of such an institutional setting, however, broader empirical evidence about their effectiveness is lacking. We apply two different empirical approaches to assess the relationship between “Coasean” institutions and the innovation performance of SMEs. In a case study, we investigate Inspire AG, a successful bottom-up, institutional invention in the spirit of a “Coasean” institution. To assess the general validity of this model, we use representative firm-level data to econometrically investigate the relationship between “Coasean” institutions and the sales share of innovative products. “Coasean” institutions are positively related with innovative sales only if the company has a sufficiently large absorptive capacity for external knowledge. This positive moderating effect of “Coasean” institutions for the innovation performance is larger for SMEs. Our empirical findings provide a strong case for policies aimed at encouraging the operation of this type of institution.

Is disposition related to momentum in Chinese market?

2015 ◽  
Vol 41 (6) ◽  
pp. 600-614 ◽  
Author(s):  
Liu Liu Kong ◽  
Min Bai ◽  
Peiming Wang
Keyword(s):  
Stock Market ◽  
Stock Markets ◽  
Disposition Effect ◽  
Chinese Stock Market ◽  
Momentum Effect ◽  
Chinese Market ◽  
Firm Level ◽  
Content Type ◽  
Level Data ◽  
The Relationship

Purpose – The purpose of this paper is to examine whether the framework of Prospect Theory and Mental Accounting proposed by Grinblatt and Han (2005) can be applied to analyzing the relationship between the disposition effect and momentum in the Chinese stock market. Design/methodology/approach – The paper applies the methodology proposed by Grinblatt and Han (2005). Findings – Using firm-level data, with a sample period from January 1998 to June 2013, the authors find evidence that the momentum effect in the Chinese stock market is not driven by the disposition effect, contradicting the findings of Grinblatt and Han (2005) concerning the US stock market. The discrepancies in the findings between the Chinese and US stock markets are robust and independent of sample periods. Research limitations/implications – The findings suggest that Grinblatt and Han’s model may not be applicable to the Chinese stock market. This is possibly because of the regulatory differences between the two stock markets and cross-national variation in investor behavior; in particular, the short-selling prohibition in the Chinese stock market and greater reference point adaptation to unrealized gains/losses among Chinese compared to Americans. Originality/value – This study provides evidence of the inapplicability of Grinblatt and Han’s model for the Chinese stock market, and shows the differences in the relationship between disposition effect and momentum between the Chinese and US stock markets.

Firm Heterogeneity in the Choice of Offshoring: Evidence from Korean Manufacturing Firms

2010 ◽  
Vol 9 (1) ◽  
pp. 157-178 ◽  
Author(s):  
Hea-Jung Hyun
Keyword(s):  
Information And Communication Technology ◽  
Communication Technology ◽  
Firm Heterogeneity ◽  
Global Sourcing ◽  
Foreign Markets ◽  
Firm Level ◽  
Intensity Information ◽  
Level Data ◽  
Information And Communication ◽  
The Relationship

Using firm-level data on offshoring of Korean manufacturers, this paper examines the relationship between firm heterogeneity and the probability of adopting offshoring. The results of the paper suggest that firm productivity may not be an important determinant for Korean firms' offshoring decision. A firm's global sourcing decision may rather depend on other characteristics such as factor intensity, research and development (R&D) intensity, information and communication technology (ICT) level, and affiliation with foreign markets when industry specificity is controlled for.

scholarly journals Impaired Capital Reallocation and Productivity

2014 ◽  
Vol 228 ◽  
pp. R35-R48 ◽  
Author(s):  
Alina Barnett ◽  
Ben Broadbent ◽  
Adrian Chiu ◽  
Jeremy Franklin ◽  
Helen Miller
Keyword(s):  
Labour Productivity ◽  
Productivity Loss ◽  
Capital Allocation ◽  
Rates Of Return ◽  
Firm Level ◽  
Capital Movements ◽  
Level Data ◽  
Capital Reallocation ◽  
The Uk ◽  
The Relationship

The level of private sector labour productivity has been particularly weak since the start of the crisis. In this paper we explore whether impairment to capital reallocation has been contributing to this weakness. The recent increase in the dispersion of output, prices and rates of return across firms and sectors is stark, and suggests that resources have had incentives to move. Efficient allocation requires that capital moves to firms and sectors where rates of return are relatively high. And the change in capital levels across sectors has been particularly low, suggesting there has been an unusually slow process of capital reallocation since 2008 compared to previous UK recessions and other banking crises. This result is also apparent within sectors. We use a simple and general model to show that increased price dispersion can be a consequence of frictions to efficient capital allocation. And the size of this dispersion can usefully inform us about the size of the associated output and productivity loss. We then find that – using firm level data – the relationship between rates of return and subsequent capital movements has changed since the financial crisis. Overall, our results suggest that impaired capital reallocation across the UK economy is likely to have been one factor contributing to the recent weakness in productivity growth.

scholarly journals Identifying Service Market Reform Priorities in Italy

2020 ◽  
Vol 20 (39) ◽  
Author(s):  
Nazim Belhocine ◽  
Daniel Garcia-Macia
Keyword(s):  
Monopolistic Competition ◽  
Large Mass ◽  
Professional Services ◽  
Policy Recommendations ◽  
Service Market ◽  
Firm Level ◽  
Exit Barriers ◽  
Level Data ◽  
Service Sectors ◽  
Italian Firm

Italy’s labor productivity in market services has declined since 2000, underperforming manufacturing and peer European countries, especially in strongly regulated sectors. A model of monopolistic competition is used to identify which service sectors would benefit more from removing entry and/or exit barriers. Using Italian firm-level data, the paper finds that sectors with high markups, such as professional services, would primarily benefit from removing entry barriers. Sectors with a large mass of unproductive firms, such as retail, would instead benefit from removing exit barriers. Policy recommendations to improve efficiency are outlined in relation to the sectoral priorities identified in the data.

The Size Distribution of Firms and Industrial Water Pollution: A Quantitative Analysis of China

2021 ◽  
Vol 13 (1) ◽  
pp. 151-183
Author(s):  
Ji Qi ◽  
Xin Tang ◽  
Xican Xi
Keyword(s):  
Water Pollution ◽  
Size Distribution ◽  
Heterogeneous Firms ◽  
Clean Technology ◽  
Industrial Water ◽  
Firm Level ◽  
Aggregate Output ◽  
Size Distribution Of Firms ◽  
Level Data ◽  
Treatment Technologies

We argue that misallocation across firms amplifies industrial water pollution by distorting the firm size distribution in China. Firm-level data indicate that larger firms are more likely to use clean technology but face higher distortions. In a heterogeneous firms model with an endogenous choice of pollution treatment technologies, we show that distortions that increase with firm-level TFP lower the adoption of clean technology, amplify aggregate pollution intensity, and lower aggregate output. Quantitatively, eliminating these correlated distortions would increase output by 30 percent and decrease pollution by 20 percent. Meanwhile, environmental regulations have sizable impact on pollution but limited effects on aggregate output. (JEL O13, O14, P28, P31, Q52, Q53, Q58)

Exporting and environmental performance: where you export matters

2022 ◽  
Author(s):  
Juan S. Blyde ◽  
Mayra A. Ramírez
Keyword(s):  
Developing Countries ◽  
High Income ◽  
Firm Level ◽  
Percentage Point Increase ◽  
Level Data ◽  
Point Increase ◽  
Firm Level Data ◽  
Micro Level ◽  
The Relationship

Empirical analyses that rely on micro-level panel data have found that exporters are generally less pollutant than non-exporters. While alternative explanations have been proposed, firm level data has not been used to examine the role of destination markets behind the relationship between exports and pollution. In this paper we argue that because consumers in high-income countries have higher valuations for clean environments than consumers in developing countries, exporters targeting high-income countries are more likely to improve their environmental outcomes than exporters targeting destinations where valuations for the environment are not high. Using a panel of firm-level data from Chile we find support to this hypothesis. A 10 percentage point increase in the share of exports to high-income countries is associated with a reduction in CO2 pollution intensity of about 16%. The results have important implications for firms in developing countries aiming to target high-income markets.

THE HETEROGENEOUS TAX BURDEN: EVIDENCE FROM FIRM-LEVEL DATA IN CHINA

2018 ◽  
Vol 63 (04) ◽  
pp. 1003-1035 ◽  
Author(s):  
JIANLIANG YE ◽  
XIAOHAN GUO ◽  
DEMING LUO ◽  
XIANGRONG JIN
Keyword(s):  
Opposite Effect ◽  
Value Added ◽  
Tax Burden ◽  
Eastern Region ◽  
Firm Level ◽  
Industrial Enterprises ◽  
Tax Reduction ◽  
Level Data ◽  
Policy Suggestions ◽  
The Relationship

Firms’ behaviors are not only affected by their taxation burden level, but also their differences from each other. In this paper, we use Chinese Industrial Enterprises Database (CIED) to investigate the relationship between firms’ heterogeneity of tax burden and firms’ characteristics, such as size, ownership, exportation and location. We measure a firm’s tax burden in three ways, the value-added tax (VAT) burden, the corporate income tax (CIT) burden, and the total tax burden. By using a Hausman–Taylor estimation, we find: (1) The CIT burden is positively correlated to the size, while other two tax burdens are not; (2) Both the VAT burden and the total tax burden of SOEs are significantly heavier than those of non-SOEs, while the CIT burden shows the exactly opposite effect; (3) Exporters have a remarkably lower tax burden than non-exporters for all three tax burden measures; and (4) The western region and particularly the central region have lighter tax burden than the eastern region for all three tax burden measures. We also provide empirical evidence and policy suggestions for continuing to proceed with the structural tax reduction and the structural fiscal reform in China.

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