EconPapers    
Economics at your fingertips  
 

A Unified Theory of Firm Selection and Growth

Costas Arkolakis

The Quarterly Journal of Economics, 2016, vol. 131, issue 1, 89-155

Abstract: This article develops an analytical framework to study firm and exporter growth and provides a dynamic foundation for a standard general equilibrium trade model. Firm-level growth is the result of idiosyncratic productivity improvements with a continuous arrival of new potential producers. A firm enters a market if it is profitable to incur the marginal cost to reach the first consumer and pays an increasing marketing cost to reach additional consumers. I calibrate the model using data on the cross section of firm sales and bilateral trade, as well as the rate of incumbent firm exit. The calibrated model predicts that a firm’s growth is inversely related to its initial size, and that the distribution of growth rates of small firms is heavily skewed to the right. These predictions are confirmed by looking at the growth of sales of U.S. firms and Brazilian exporters to the United States. I use this model to study the impact of cross-firm reallocations on economic activity and measured productivity. JEL Codes: F12, L11, M31, D92.

Date: 2016
References: Add references at CitEc
Citations: View citations in EconPapers (86)

Downloads: (external link)
http://hdl.handle.net/10.1093/qje/qjv039 (application/pdf)
Access to full text is restricted to subscribers.

Related works:
Working Paper: A Unified Theory of Firm Selection and Growth (2011) Downloads
Working Paper: A Unified Theory of Firm Selection and Growth (2009) Downloads
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:oup:qjecon:v:131:y:2016:i:1:p:89-155.

Ordering information: This journal article can be ordered from
https://academic.oup.com/journals

Access Statistics for this article

The Quarterly Journal of Economics is currently edited by Robert J. Barro, Lawrence F. Katz, Nathan Nunn, Andrei Shleifer and Stefanie Stantcheva

More articles in The Quarterly Journal of Economics from President and Fellows of Harvard College
Bibliographic data for series maintained by Oxford University Press ().

 
Page updated 2025-03-19
Handle: RePEc:oup:qjecon:v:131:y:2016:i:1:p:89-155.