Role of quality differentiation on firm size distributions

William Connell Garcia and Hylke Vandenbussche

No 660333, Working Papers of Department of Economics, Leuven from KU Leuven, Faculty of Economics and Business (FEB), Department of Economics, Leuven

Abstract: The dispersion of firm size distributions vary strongly across sectors. Until now, sectoral variations in intra-industry heterogeneity were attributed to sectoral differences in the exogenous dispersion of the productivity of _rms, differences in sectoral horizontal differentiation, sectoral trade openness and country characteristics. In this paper, we build on this result by additionally examining the role of the sectoral scope for quality differentiation. Our theoretical and empirical findings reveal that whenever there is room for quality differentiation, the role of large firms is even stronger and inequality in firm size is exacerbated.

Keywords: Size distribution of Firms; Power Law Distribution; Quality; Firm Level Analysis; Trade Openness (search for similar items in EconPapers)
Pages: 51
Date: 2020
New Economics Papers: this item is included in nep-tid
Note: paper number DPS 20.16
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Published in FEB Research Report Department of Economics

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Persistent link: https://EconPapers.repec.org/RePEc:ete:ceswps:660333

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