NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

NBER Working Papers by Hugo Hopenhayn

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Working Papers

August 2014On the Measure of Distortions
w20404
Abstract The paper considers formally the mapping from distortions in the allocations of resources across firms to aggregate productivity. TFP gaps are characterized as the integral of a strictly concave function with respect to an employment-weighted measure of distortions. Size related distortions are shown to correspond to a mean preserving spread of this measure, explaining the stronger effects on TFP found in the literature. In general, the effect of correlation between distortions and productivity is shown to be ambiguous; conditions are given to determine its sign. An empirical lower bound on distortions based on size distribution of firms is derived and analyzed, revealing that substantial rank reversals in firm size are necessary for distortions to explain large TFP gaps. The effe...
July 2014Information, Misallocation and Aggregate Productivity
with Joel M. David, Venky Venkateswaran: w20340
We propose a theory linking imperfect information to resource misallocation and hence to aggregate productivity and output. In our setup, firms look to a variety of noisy information sources when making input decisions. We devise a novel empirical strategy that uses a combination of firm-level production and stock market data to pin down the information structure in the economy. Even when only capital is chosen under imperfect information, applying this methodology to data from the US, China, and India reveals substantial losses in productivity and output due to the informational friction. Our estimates for these losses range from 7-10% for productivity and 10-14% for output in China and India, and are smaller, though still significant, in the US. Losses are substantially higher when labor...
August 2002Market Size Matters
with Jeffrey R. Campbell: w9113
This paper characterizes the effects of market size on the size distribution of establishments for thirteen retail trade industries across 225 U.S. cities. In nearly every industry we examine, establishments are larger in larger cities, and in four industries the dispersion of establishment sizes depends on market size. Models of competition in which individual producers' markups do not depend on the number of producers are inconsistent with these observations. Models in which competition is tougher in larger markets can reproduce the positive effect of market size on establishments' average size.

Published: Campbell, Jeffrey R. and Hugo A. Hopenhayn. "Market Size Matters," Journal of Industrial Economics, 2005, v53(1,Mar), 1-25. citation courtesy of

April 1999Innovation Fertility and Patent Design
with Matthew F. Mitchell: w7070
It may be advantageous to provide a variety of kinds of patent protection to heterogenous innovations. Innovations which benefit society largely through their use as building blocks to future inventions may require a different scope of protection in order to be encouraged. We model the problem of designing an optimal patent menu (scope and length) when the fertility of an innovation in generating more innovations cannot be observed. The menu of patent scope can be implemented with mandated buyout fees. Evidence of heterogeneous fertility and patent obsolescence, keys to the model, are presented using patent data from the US.

Contact and additional information for this authorAll NBER papers and publicationsNBER Working Papers onlyInformation about this author at RePEc

 
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