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Welfare and Trade without Pareto

 

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Type:   Article
 
Titre:   Welfare and Trade without Pareto
 
Auteur(s):   Head, Keith - Sauder School of Business (Auteur)
Mayer, Thierry - Département d'économie (Auteur)
Thoenig, Mathias - Centre Universitaire d'Informatique (Auteur)
 
In:   American Economic Review
 
Date de publication:   2014-05
 
Éditeur:   ÉTATS-UNIS  :  American Economic Association
 
Volume:   104
 
Numéro:   5
 
Pages:   310-316  p.
 
ISSN:   00028282
 
DOI:   http://dx.doi.org/10.1257/aer.104.5.310
 
JEL:   C46,  D24,  D43,  D60,  L13,  L25
 
Résumé:   [en] 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.
 
 

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