 Power laws in firm size and openness to trade: Measurement and implicationsJulian di Giovanni, Andrei Levchenko and Romain Ranciere Post-Print from HAL 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 firms. We use a dataset of French firms to demonstrate that this prediction is strongly supported by the data, both for the economy as a whole and at the industry level. Furthermore, the differences between power law coefficients for exporters and non-exporters are larger in sectors that are more open to trade. 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: Firm size distribution; International trade; Power laws (search for similar items in EconPapers) Published in Journal of International Economics, 2011, 85 (1), pp.42-52. ⟨10.1016/j.jinteco.2011.05.003⟩ There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it. Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:halshs-00754523 DOI: 10.1016/j.jinteco.2011.05.003 Access Statistics for this paper More papers in Post-Print from HAL |
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