TY  - JOUR
AU  - Holmes,Thomas J.
AU  - Stevens,John J.
TI  - An Alternative Theory of the Plant Size Distribution with an Application to Trade
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 15957
PY  - 2010
Y2  - April 2010
UR  - http://www.nber.org/papers/w15957
L1  - http://www.nber.org/papers/w15957.pdf
N1  - Author contact info:
Thomas J. Holmes
Department of Economics
University of Minnesota
4-101 Hanson Hall
1925 Fourth Street South
Minneapolis, MN 55455
Tel: 612/625-4512
Fax: 612/624-0209
E-Mail: holmes@umn.edu

John J. Stevens
Industrial Output Section, Mail Stop 82
Division of Research and Statistics
Board of Governors of the Federal Reserve System
Washington, DC  20551
Tel: 202-452-2206
E-Mail: John.J.Stevens@frb.gov
AB  - There is wide variation in the sizes of manufacturing plants, even within the most narrowly defined industry classifications used by statistical agencies. Standard theories attribute all 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, including estimates of plant counts in the standardized and specialty segments by industry. The estimated model fits the data relatively well compared with estimates based on standard approaches. In particular, the predictions of the model for the impacts of a surge in imports from China are consistent with what happened to U.S. manufacturing industries that experienced such a surge over the period 1997--2007. Large-scale standardized plants were decimated, while small-scale specialty plants were relatively less impacted.
ER  -