Note: Thanks to the team at IBGE, the national statistical office of Brazil, for their hospitality and providing access to the firm level data. IBGE ensures confidentiality of responses by requiring researchers to work on site at CDDI with output checked before leaving the premises. This paper benefited from detailed comments by Marcel Timmer, two anonymous referees, the editor Robert Hill, and numerous comments and discussions at the 2008 IARIW conference in Portoroz, the 2010 IARIW conference in Sankt Gallen, the CAED conference at Imperial College, and seminars at the University of Groningen and the Inter-American Development Bank.
Productivity in a Distorted Market: The Case of Brazil's Retail Sector
Article first published online: 25 JAN 2013
© 2013 International Association for Research in Income and Wealth
Review of Income and Wealth
Volume 60, Issue 3, pages 499–524, September 2014
How to Cite
de Vries, G. J. (2014), Productivity in a Distorted Market: The Case of Brazil's Retail Sector. Review of Income and Wealth, 60: 499–524. doi: 10.1111/roiw.12017
- Issue published online: 25 JUL 2014
- Article first published online: 25 JAN 2013
- resource allocation;
- retail sector
In a model of monopolistic competition with heterogeneous firms, distortions in prices drive a wedge between the marginal revenue products of factor inputs across firms. We use census data for Brazil's retail sector to study implications for aggregate productivity and relate distortions to regional variation in regulation using a differences-in-differences approach. Taxes, entry regulation, and access to credit may create distortions to output and capital that varies by firm size. Potential gains from reallocation have not diminished despite the process of services liberalization in the 1990s.