#2272. Sales and Markup Dispersion: Theory and Empirics

July 2026publication date
Proposal available till 30-05-2025
4 total number of authors per manuscript3510 $

The title of the journal is available only for the authors who have already paid for
Journal’s subject area:
Economics and Econometrics;
Places in the authors’ list:
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2 place - free (for sale)
3 place - free (for sale)
4 place - free (for sale)

Abstract:
We characterize the relationship between the distributions of two variables linked by a structural model. We then show that, in models of heterogeneous firms in monopolistic competition, this relationship implies a new demand function that we call “CREMR” (Constant Revenue Elasticity of Marginal Revenue). Among the applications we consider, we use our methodology to characterize misallocation across firms; we derive the distribution of markups implied by any assumptions on demand and productivity; and we show empirically that CREMR-based markup distributions provide an excellent parsimonious fit to Indian firm-level data, which in turn allows us to calculate the proportion of firms that are of suboptimal size in the market equilibrium.
Keywords:
CREMR demands; Gibrats Law; heterogeneous firms; lognormal versus Pareto distributions; sales and markup distributions

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