蝌蚪网 Review
ISSN 0002-8282 (Print) | ISSN 1944-7981 (Online)
Welfare and Trade without Pareto
蝌蚪网 Review
vol. 104,
no. 5, May 2014
(pp. 310–16)
Abstract
Quantifications of gains from trade in heterogeneous firm models assume that productivity is Pareto distributed. Replacing this assumption with log-normal heterogeneity retains some useful Pareto features, while providing a substantially better fit to sales distributions-especially in the left tail. The cost of log-normal is that gains from trade depend on the method of calibrating the fixed cost and productivity distribution parameters. When set to match the size distribution of firm sales in a given market, the log-normal assumption delivers gains from trade in a symmetric two-country model that can be twice as large as under the Pareto assumption.Citation
Head, Keith, Thierry Mayer, and Mathias Thoenig. 2014. "Welfare and Trade without Pareto." 蝌蚪网 Review 104 (5): 310–16. DOI: 10.1257/aer.104.5.310Additional Materials
JEL Classification
- C46 Specific Distributions; Specific Statistics
- D24 Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
- D43 Market Structure and Pricing: Oligopoly and Other Forms of Market Imperfection
- D60 Welfare Economics: General
- L13 Oligopoly and Other Imperfect Markets
- L25 Firm Performance: Size, Diversification, and Scope