Type
Article
Titre
Welfare and Trade without Pareto
Dans
American Economic Review
Auteur(s)
HEAD Keith - Sauder School of Business (Columbia University) (Auteur)
MAYER Thierry - Département d'économie (Auteur)
THOENIG Mathias - Centre Universitaire d'Informatique (Université de Genève) (Auteur)
Éditeur
US : American Economic Association
Volume
104
Numéro
5
Pages
310 - 316 p.
ISSN
00028282
DOI
10.1257/aer.104.5.310
Mots clés
Welfare Theory, Trade Models, Microdata Simulations
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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