American Economic Journal:
Macroeconomics
ISSN 1945-7707 (Print) | ISSN 1945-7715 (Online)
Entry Barriers, Idiosyncratic Distortions, and the Firm Size Distribution
American Economic Journal: Macroeconomics
(pp. 416–68)
Abstract
This paper studies the interaction between barriers to firm entry and distortions to allocative efficiency in a standard model of firm dynamics. We derive a strategy to infer entry barriers based on cross-country differences in the firm size distribution and idiosyncratic distortions. The inferred barriers resemble regulation-based indicators in advanced economies but are substantially higher in middle- and low-income countries. Regulation-based indicators cannot account for cross-country differences in average firm size and underestimate the aggregate productivity gains associated with their removal by up to 8 percent on average.Citation
Fattal-Jaef, Roberto N. 2022. "Entry Barriers, Idiosyncratic Distortions, and the Firm Size Distribution." American Economic Journal: Macroeconomics 14 (2): 416–68. DOI: 10.1257/mac.20200234Additional Materials
JEL Classification
- D21 Firm Behavior: Theory
- D24 Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
- H25 Business Taxes and Subsidies including sales and value-added (VAT)
- L11 Production, Pricing, and Market Structure; Size Distribution of Firms
- L60 Industry Studies: Manufacturing: General