Firms and Economic Performance: A View from Trade

• Authors: Gino Gancia.
• BSE Working Paper: 110520 | July 18
• Keywords: international trade , Quality , firm heterogeneity , granularity , US imports , prices , variety
• JEL codes: F12, F14
• international trade
• Quality
• firm heterogeneity
• granularity
• US imports
• prices
• variety

We use transaction-level US import data to compare firms from virtually all countries in the world competing in a single destination market. Guided by a simple theoretical framework, we decompose countries’ market shares into the contribution of the number of firm-products, their average attributes (quality and efficiency) and heterogeneity around the mean. To further explore the role of exceptional firms, we develop a novel decomposition that identifies the contribution of deviations from continuous distributions. We then study how the distribution of firm-level characteristics varies across countries. Our results shed new light on how firms shape aggregate economic performance.