Sales and Markup Dispersion: Theory and Empirics
J. Peter Neary () and
Mathieu Parenti ()
No 12044, CEPR Discussion Papers from C.E.P.R. Discussion Papers
We derive exact conditions relating the distributions of firm productivity, sales, output, and markups to the form of demand; in particular, for a large family (including Pareto, lognormal, and Frechet), the distributions of productivity and sales are the same if and only if demand is "CREMR'' (Constant Revenue Elasticity of Marginal Revenue). We then use the Kullback-Leibler Divergence to quantify the information loss when a predicted distribution fails to match the actual one; empirically, to explain sales and markups distributions, the choice between Pareto and lognormal productivity distributions matters less than the choice between CREMR and other demands.
Keywords: CREMR Demands; Heterogeneous Firms; Kullback-Leibler Divergence; Log-Normal Distribution; Pareto Distribution. (search for similar items in EconPapers)
JEL-codes: F12 F15 F23 (search for similar items in EconPapers)
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (10) Track citations by RSS feed
Downloads: (external link)
CEPR Discussion Papers are free to download for our researchers, subscribers and members. If you fall into one of these categories but have trouble downloading our papers, please contact us at email@example.com
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
Persistent link: https://EconPapers.repec.org/RePEc:cpr:ceprdp:12044
Ordering information: This working paper can be ordered from
http://www.cepr.org/ ... rs/dp.php?dpno=12044
Access Statistics for this paper
More papers in CEPR Discussion Papers from C.E.P.R. Discussion Papers Centre for Economic Policy Research, 33 Great Sutton Street, London EC1V 0DX.
Bibliographic data for series maintained by ().