Entry and Exit, Multi-Product Firms, and Allocative Distortions

Fattal Jaef, Roberto N.

World Bank, Washington, DC

关键词: MISALLOCATION;    FIRM DYNAMICS;    TRANSITIONAL DYNAMICS;    DISTORTION;    FACTOR ALLOCATION;   

DOI  :  10.1596/1813-9450-8023
RP-ID  :  WPS8023

学科分类：社会科学、人文和艺术（综合）

来源: World Bank Open Knowledge Repository

【 摘 要 】

This paper proposes a multi-productmodel of firm dynamics to understand the implications ofallocative distortions for the decisions of firms to enter,exit, and supply products to the market. These margins ofadjustment have been largely neglected in the literature yethave direct contributions to welfare and productivity. Thepaper finds that when the analysis accounts for thesechannels, the traditional focus on long-run gains in TotalFactor Productivity from reversing misallocation stronglyunderestimates the welfare gains that accrue when accountingfor transitional dynamics. Calibrating the distortions toChina in 1998, the analysis finds a welfare gain of 32percent and a steady-state gain of 10 percent.