fbpx Firm Heterogeneity and Aggregate Welfare | Harvard Kennedy School

Additional Authors:

  • Marc Melitz


Firm Heterogeneity and Aggregate Welfare. Marc Melitz, March 15, 2013, Paper. "We examine how firm heterogeneity influences aggregate welfare through endogenous firm selection. We consider a homogeneous firm model that is a special case of a heterogeneous firm model with a degenerate productivity distribution. Keeping all structural parameters besides the productivity distribution the same, we show that the two models have different aggregate welfare implications, with larger welfare gains from reductions in trade costs in the heterogeneous firm model. Calibrating parameters to key U.S. aggregate and firm statistics, we find..."  Link verified March 28, 2014