Unraveling Firms: Demand, Productivity and Markups Heterogeneity

• 成果类型: Article
• 署名作者: Forlani, Emanuele; Martin, Ralf; Mion, Giordano; Muuls, Mirabelle
• 署名单位: University of Pavia; Imperial College London; University of London; London School Economics & Political Science; Centre for Economic Policy Research - UK; ESSEC Business School; University of Nottingham; Leibniz Association; Ifo Institut
• 刊物名称: ECONOMIC JOURNAL
• ISSN/ISSBN: 0013-0133
• DOI: 10.1093/ej/uead031
• 发表日期: 2023
• 页码: 2251-2302
• 关键词: import competition; multiproduct firms; TRADE; exporters; prices; MARKET; IMPACT; CHINA

摘要

We develop a novel framework that simultaneously allows recovering heterogeneity in demand, quantity total factor productivity and markups across firms while leaving the correlation between the three dimensions unrestricted. We accomplish this by explicitly introducing demand heterogeneity and systematically exploiting assumptions used in previous productivity estimation approaches. In doing so, we provide an exact decomposition of revenue productivity in terms of the underlying heterogeneities, thus bridging the gap between quantity and revenue productivity estimations. We use Belgian firms' production data to quantify total factor productivity, demand and markups, and show how they are correlated with each other across time and with measures obtained from other approaches. In doing so, we find quantity total factor productivity and demand to be strongly negatively correlated with each other, so suggesting a trade-off between the quality of a firm's products and their production cost. We also show how our framework provides deeper and sharper insights on the response of firms to increasing import competition from China. In particular, we find that changes in revenue productivity materialise as the outcome of complex and sometimes offsetting changes in quantity total factor productivity, demand, markups and production scale.