Sales and Markup Dispersion: Theory and Empirics

J. Peter Neary and Mrázová, Monika
Authors registered in the RePEc Author Service: Mathieu Parenti ()

No 12044, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: We derive exact conditions relating the distributions of firm productivity, sales, output, and markups to the form of demand in monopolistic competition. Applications include a new "CREMR" demand function (Constant Revenue Elasticity of Marginal Revenue): it is necessary and sufficient for the distributions of productivity and sales to have the same form (whether Pareto, lognormal, or Fréchet) in the cross section, and for Gibrat's Law to hold over time; it implies a new class of distributions well-suited to capture the dispersion of markups; and it provides a parsimonious fit for the distributions of sales and markups superior to most widely-used alternatives.

Keywords: Cremr demands; Gibrat's law; Heterogeneous firms; Kullback-leibler divergence; Lognormal versus pareto distributions; Sales and markup distributions (search for similar items in EconPapers)
JEL-codes: F12 F15 F23 (search for similar items in EconPapers)
Date: 2017-05
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (17)

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Related works:
Journal Article: Sales and Markup Dispersion: Theory and Empirics (2021)
Working Paper: Sales and Markup Dispersion: Theory and Empirics (2018)
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