Firm Size Distribution and Variable Elasticity of Demand

Yuichiro Matsumoto ()
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Yuichiro Matsumoto: Osaka University

No 19-02, Discussion Papers in Economics and Business from Osaka University, Graduate School of Economics

Abstract: Prior studies suggest that a Pareto distribution of the firm fs productivity distribution is difficult to replicate the observed log standard deviation of firm sales. These studies are based on constant elasticity preferences, which entail too low log sales deviation. The present study shows that, in contrast to constant elasticity cases, the log standard deviation is too high in variable elasticity cases. To match the observed sales dispersion, one must set a Pareto tail parameter relatively higher values.

Keywords: Firm Size Distribution; Pareto Distribution; Variable Elasticity of Substitution (search for similar items in EconPapers)
JEL-codes: L10 L11 L13 (search for similar items in EconPapers)
Pages: 12 pages
Date: 2019-03
New Economics Papers: this item is included in nep-bec, nep-com and nep-ind
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