Firm Learning and Growth
We develop a general equilibrium model of firm growth with learning about unobserved demand. Our framework introduces learned (Jovanovic, 1982) into a monopolistically competitive environment iwht firm productivity heterogeneity, á la Melitz (2003). The model correctly predicts that firm growth rates decrease with age, hoding size constant, a fact that models focusing on idiosyncratic productivity shcoks have difficulty matching. We calibrate the model using Colombian plant-level data and find that it matches growth and survival patterns well. Unlike the standard Melitz setup the model with learning is no longer efficient, leaving room for welfare improving policies. We illustrate how subsidies to the fixed costs of young firms can be welfare enhancing: they allow young firms to avoid early exit and thus, benefit consumers through access to a larger number of varieties.
|Date of creation:||Feb 2015|
|Contact details of provider:|| Web page: http://www.gwu.edu/~iiep/|
More information through EDIRC
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Swati Dhingra & John Morrow, 2012.
"The Impact of Integration on Productivity and Welfare Distortions Under Monopolistic Competition,"
FIW Working Paper series
- Swati Dhingra & John Morrow, 2012. "The Impact of Integration on Productivity and Welfare Distortions Under Monopolistic Competition," CEP Discussion Papers dp1130, Centre for Economic Performance, LSE.
- Jaap H. Abbring & Jeffrey R. Campbell, 2003. "A Structural Empirical Model of Firm Growth, Learning, and Survival," NBER Working Papers 9712, National Bureau of Economic Research, Inc.
- Abbring, Jaap H. & Campbell, Jeffrey R., 2003. "A Structural Empirical Model of Firm Growth, Learning, and Survival," IZA Discussion Papers 781, Institute for the Study of Labor (IZA).
- Jaap H. Abbring & Jeffrey R. Campbell, 2003. "A structural empirical model of firm growth, learning, and survival," Working Paper Series WP-03-11, Federal Reserve Bank of Chicago.
- John C. Haltiwanger & Ron S. Jarmin & Javier Miranda, 2010. "Who Creates Jobs? Small vs. Large vs. Young," NBER Working Papers 16300, National Bureau of Economic Research, Inc.
When requesting a correction, please mention this item's handle: RePEc:gwi:wpaper:2015-5. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Kyle Renner)
If references are entirely missing, you can add them using this form.