Premium
Productivity in a Distorted Market: The Case of B razil's Retail Sector
Author(s) -
Vries Gaaitzen J.
Publication year - 2014
Publication title -
review of income and wealth
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.024
H-Index - 57
eISSN - 1475-4991
pISSN - 0034-6586
DOI - 10.1111/roiw.12017
Subject(s) - monopolistic competition , economics , productivity , revenue , total factor productivity , competition (biology) , monetary economics , liberalization , marginal revenue , labour economics , microeconomics , macroeconomics , market economy , monopoly , finance , ecology , biology
In a model of monopolistic competition with heterogeneous firms, distortions in prices drive a wedge between the marginal revenue products of factor inputs across firms. We use census data for B razil's retail sector to study implications for aggregate productivity and relate distortions to regional variation in regulation using a differences‐in‐differences approach. Taxes, entry regulation, and access to credit may create distortions to output and capital that varies by firm size. Potential gains from reallocation have not diminished despite the process of services liberalization in the 1990s.