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Unraveling firms: demand, productivity and markupsheterogeneity

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  • Forlani, Emanuele
  • Martin, Ralf
  • Mion, Giordano
  • Muuls, Mirabelle

Abstract

We develop a new econometric framework that simultaneously allows recovering heterogeneity in demand, TFP and markups across firms while leaving the correlation among the three unrestricted. We do this by systematically exploiting assumptions that are implicit in previous firm-level productivity estimation approaches. We use Belgian firms production data to quantify TFP, demand and markups and show how they are correlated among them, across time and with measures obtained from other approaches. We also show to what extent our three dimensions of heterogeneity allow us to gain deeper and sharper insights on two key firm-level outcomes: export status and size.

Suggested Citation

  • Forlani, Emanuele & Martin, Ralf & Mion, Giordano & Muuls, Mirabelle, 2016. "Unraveling firms: demand, productivity and markupsheterogeneity," LSE Research Online Documents on Economics 66413, London School of Economics and Political Science, LSE Library.
  • Handle: RePEc:ehl:lserod:66413
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    References listed on IDEAS

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    Cited by:

    1. Dobbelaere, Sabien & Kiyota, Kozo, 2018. "Labor market imperfections, markups and productivity in multinationals and exporters," Labour Economics, Elsevier, vol. 53(C), pages 198-212.
    2. Dobbelaere, Sabien & Mairesse, Jacques, 2018. "Comparing micro-evidence on rent sharing from two different econometric models," Labour Economics, Elsevier, vol. 52(C), pages 18-26.
    3. Stiebale, Joel & Vencappa, Dev, 2016. "Acquisitions, markups, efficiency, and product quality: Evidence from India," DICE Discussion Papers 229, University of Düsseldorf, Düsseldorf Institute for Competition Economics (DICE).
    4. di Mauro, Filippo & Mion, Giordano & Stöhlker, Daniel, 2017. "The drivers of revenue productivity: a new decomposition analysis with firm-level data," Working Paper Series 2014, European Central Bank.
    5. repec:eee:inecon:v:112:y:2018:i:c:p:70-87 is not listed on IDEAS
    6. Laurens Cherchye & Thomas Demuynck & Bram De Rock & Marijn Verschelde, 2018. "Nonparametric identification of unobserved technological heterogeneity in production," Working Paper Research 335, National Bank of Belgium.
    7. Catherine Y. Co & Thu Kim Nguyen & Tung Nhu Nguyen & Que Nguyet Tran, 2017. "The missing middle: Growing and strengthening Viet Nam’s micro, small, and medium-sized enterprises," WIDER Working Paper Series 072, World Institute for Development Economic Research (UNU-WIDER).

    More about this item

    Keywords

    Demand; productivity; markups; production function estimation; export status; firm size;

    JEL classification:

    • J1 - Labor and Demographic Economics - - Demographic Economics
    • N0 - Economic History - - General

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