Power Laws in Firm Size and Openness to Trade: Measurement and Implications

Andrei Levchenko, Julian di Giovanni and Romain Ranciere

No 2010/109, IMF Working Papers from International Monetary Fund

Abstract: Existing estimates of power laws in firm size typically ignore the impact of international trade. Using a simple theoretical framework, we show that international trade systematically affects the distribution of firm size: the power law exponent among exporting firms should be strictly lower in absolute value than the power law exponent among non-exporting rms. We use a dataset of French firms to demonstrate that this prediction is strongly supported by the data. While estimates of power law exponents have been used to pin down parameters in theoretical and quantitative models, our analysis implies that the existing estimates are systematically lower than the true values. We propose two simple ways of estimating power law parameters that take explicit account of exporting behavior.

Keywords: WP; firm size; size distribution; firm export; orders firm; Firm Size Distribution; International Trade; Power Laws; exporting firm; firms model; size heterogeneity; Exports; Agroindustries; Global (search for similar items in EconPapers)
Pages: 31
Date: 2010-04-01
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (10)

Downloads: (external link)
http://www.imf.org/external/pubs/cat/longres.aspx?sk=23764 (application/pdf)

Related works:
Journal Article: Power laws in firm size and openness to trade: Measurement and implications (2011)
Working Paper: Power laws in firm size and openness to trade: Measurement and implications (2011)
Working Paper: Power laws in firm size and openness to trade: Measurement and implications (2011)
Working Paper: Power Laws in Firm Size and Openness to Trade: Measurement and Implications (2010)
Working Paper: Power Laws in Firm Size and Openness to Trade: Measurement and Implications (2010)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:imf:imfwpa:2010/109

Ordering information: This working paper can be ordered from
http://www.imf.org/external/pubs/pubs/ord_info.htm

Access Statistics for this paper

More papers in IMF Working Papers from International Monetary Fund International Monetary Fund, Washington, DC USA. Contact information at EDIRC.
Bibliographic data for series maintained by Akshay Modi ().