Creator: Kehoe, Timothy Jerome, 1953-, Pujolas, Pau S., and Ruhl, Kim J. Series: Staff report (Federal Reserve Bank of Minneapolis. Research Department) Number: 533 Abstract:
We show that a trade model with an exogenous set of heterogeneous firms with fixed operating costs has the same aggregate outcomes as a span-of-control model. Fixed costs in the heterogeneous-firm model are entrepreneurs' forgone wage in the span-of-control model.
Keyword: Span-of-control model, Firm heterogeneity, Income distribution, and International trade Subject (JEL): D31 - Personal Income, Wealth, and Their Distributions, D43 - Market Structure, Pricing, and Design: Oligopoly and Other Forms of Market Imperfection, and F12 - Models of Trade with Imperfect Competition and Scale Economies; Fragmentation