An alternative theory of the plant size distribution, with geography and intra- and international trade

Thomas J. Holmes, John J. Stevens

Research output: Contribution to journalArticle

29 Scopus citations

Abstract

There is wide variation in the sizes of manufacturing plants, even within the most narrowly defined industry classifications. Standard theories attribute such size differences to productivity differences. This paper develops an alternative theory in which industries are made up of large plants producing standardized goods and small plants making custom or specialty goods. It uses confidential census data to estimate the parameters of the model. The model fits the data well. In particular, the predictions of the model regarding the effect of a surge of imports from China are consistent with what happened over the period 1997-2007.

Original languageEnglish (US)
Pages (from-to)369-421
Number of pages53
JournalJournal of Political Economy
Volume122
Issue number2
DOIs
StatePublished - Apr 2014

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