Firm Dynamics

Thomas Winberry

A method for solving heterogeneous-agent models with aggregate shocks that replaces the infinite-dimensional distribution with a flexible parametric family, treats that family's moments as endogenous …

Maryam Farboodi · Laura Veldkamp

The paper builds a tractable dynamic general-equilibrium model in which data is information that firms accumulate to forecast a moving target, is generated as a by-product of production, is tradeable …

Luca Gagliardone · Mark Gertler · Simone Lenzu · Joris Tielens

This paper addresses a fundamental puzzle in macroeconomics: why do estimates of the New Keynesian Phillips curve (NKPC) slope differ sharply depending on whether real marginal cost or the output gap …

Stephan Lauermann · Asher Wolinsky

This paper develops an auction model that jointly incorporates three frictions pervading informal price-formation processes: (1) costly recruitment by the seller, (2) costly participation by bidders, …

Ariel T Burstein · Vasco M Carvalho · Basile Grassi

The paper asks how firm-level, sector-level, and aggregate markups comove with output at different levels of aggregation, and whether a single structural model can reconcile seemingly contradictory …

Takuo Sugaya · Alexander Wolitzky

This paper asks how a third-party intermediary (an "algorithm") that observes market demand or costs superior to competing firms should optimally disclose that information to maximize the firms' …

Miao Ben Zhang

This paper is a published comment by Miao Ben Zhang (USC Marshall School of Business) on Mihet, Rishabh, and Gomes (2025), "Is It AI or Data That Drives Market Power?" Zhang identifies three …

Ippei Fujiwara · Kiminori Matsuyama

Fujiwara and Matsuyama ask whether the well-documented flattening of the New Keynesian Phillips curve (NKPC) and the concurrent rise in market concentration and markup rates are causally linked or …

Walter Beckert · Howard Smith · Yuya Takahashi

How does individually negotiated pricing — where buyers make discrete choices among differentiated products and negotiate transaction-specific prices — affect market power and merger effects in …

Ilwoo Hwang · Kyungmin Kim · Raphael Boleslavsky

Hwang, Kim, and Boleslavsky study how firms in an oligopoly simultaneously choose prices and advertising strategies, where advertising is modeled as the choice of how much product information to …

Fernando Alvarez · Katarína Borovičková · Robert Shimer

This paper asks two related questions. First, can one develop a robust, distribution-free estimator for the discrete-time mixed proportional hazard (MPH) model of duration with unobserved …

Myrto Kalouptsidi · Yuichi Kitamura · Lucas Lima · Eduardo Souza-Rodrigues

Discrete choice data identify only differences in agents' utilities, not utility levels. In dynamic discrete choice (DDC) models this means many policy-relevant counterfactuals — those requiring …

Andrea Chiavari

This paper asks how rising returns to scale in production contributed to three concurrent U.S. secular trends since 1980: declining business dynamism, rising markups, and growing firm expenditures on …

Marek Ignaszak · Petr Sedláček

This paper asks whether firm-level customer acquisition — distinct from productivity differences — is a quantitatively important driver of aggregate economic growth, and whether ignoring it distorts …

El Hadi Caoui · Andrew Steck

This paper investigates how buyer demand for supplier diversification shapes entry incentives and market structure, using the global undersea fiber-optic cable industry as the empirical setting. The …

Matthew Leisten · Nicholas Vreugdenhil

This paper evaluates the efficiency of linked environmental regulation, a targeting mechanism whereby inspectors who discover violations at one plant can increase enforcement pressure on other plants …

Gautam Gowrisankaran · Ashley Langer · Mar Reguant

This paper asks how rate-of-return (RoR) regulation in U.S. electricity markets affects the speed and efficiency of energy transitions, specifically the transition from coal to combined-cycle natural …

Alessandra Peter

Most quantitative models of entrepreneurship assume that large firms are widely held and unconstrained; this paper documents that across the Eurozone they are frequently not, and asks what that …

Richard Audoly

How do aggregate economic fluctuations reallocate workers across the firm productivity distribution over the business cycle? In particular, to what extent do recessions impede workers' movement up the …

Galina Vereshchagina

This paper quantifies how idiosyncratic firm-level risk affects aggregate output, TFP, and firm life-cycle growth in an environment where firm productivity evolves endogenously through risky …

Wenhao Li · Ye Li

Crises have cleansing effects—low-quality firms face greater financial shortfalls and invest less than high-quality firms—but public credit support dampens these effects by reducing financing cost …

Emmanuel Dhyne · Ayumu Ken Kikkawa · Toshiaki Komatsu · Magne Mogstad · Felix Tintelnot

The paper asks three related questions in the context of Belgium, a small open economy: (1) What do firms' responses to demand shocks reveal about their cost structures? (2) What are the worker and …

Tan Gan · Nicholas Wu

This paper studies a dynamic mechanism design problem in which an informed seller sells an experience good to a skeptical buyer who learns about the product through consumption. The central question …

Karam Jo · Seula Kim

Jo and Kim ask two related questions: (1) How do firms use different types of innovation when learning others' technology takes time? (2) How does this process alter the aggregate implications of firm …

Ben Weidmann · Joseph Vecci · Farah Said · Sonia Bhalotra · Achyuta Adhvaryu · Anant Nyshadham · Jorge Tamayo · David Deming

This paper develops a novel experimental method to identify the causal contribution of managers to team performance, and uses it to evaluate which characteristics predict managerial effectiveness and …

Joaquin Blaum · Federico Esposito · Sebastian Heise

Blaum, Esposito, and Heise study how supply chain risk — specifically, the risk of unexpected shipping delays caused by ocean weather conditions — affects U.S. manufacturing firms' import sourcing …

Paul H S Kim · Anran Li

Kim and Li study how publicly provided reinsurance affects insurer behavior and market outcomes in health insurance markets where firms face substantial cost uncertainty. The central question is …

Marianne Bertrand · Matilde Bombardini · Raymond Fisman · Francesco Trebbi · Eyub Yegen

This paper investigates whether institutional investors influence the political activities of their portfolio firms, using political action committee (PAC) giving as a window into the broader question …

François Gourio · Anil K. Kashyap

Plant-level data from Chile and the U.S. show that swings in aggregate investment come almost entirely from changes in how many establishments are having an investment spike, not how big those spikes …

Virginia Minni

This paper asks why managers matter for firm performance, and specifically whether managers improve productivity by matching workers to better-suited jobs inside firms rather than through supervision, …

Renjie Bao · Jan De Loecker · Jan Eeckhout

This paper asks whether managers are paid for market power. Bao, De Loecker, and Eeckhout build a general equilibrium model in which firms compete oligopolistically in goods markets (following Atkeson …

Matthew Elliott · Andrea Galeotti · Andrew Koh · Wenhao Li

This paper asks what market outcomes an information designer — modeled as an internet platform that knows consumers' preferences — can achieve by choosing what information to disclose to competing …

Eric Anderson · Sergio Rebelo · Arlene Wong

Anderson, Rebelo, and Wong study the behavior of markups in the retail sector across regions and over time, using a combination of firm-level Compustat data and product-level scanner data from two …

Vivek Bhattacharya · Gastón Illanes · David Stillerman

This paper by Bhattacharya, Illanes, and Stillerman makes two contributions to the debate over US antitrust enforcement stringency. First, it documents the price, quantity, and assortment effects of a …

Michael P Leung · Hyungsik Roger Moon

This paper proves a central limit theorem (CLT) for network formation models with strategic interactions and homophilous agents, addressing a foundational inferential gap in the econometrics of large …

Daron Acemoglu · Daniel Huttenlocher · Asuman Ozdaglar · James Siderius

Acemoglu, Huttenlocher, Ozdaglar, and Siderius develop a two-sided platform model to study the welfare consequences of digital advertising as an online business model. The platform intermediates …

Gene M Grossman · Elhanan Helpman · Alejandro Sabal

Grossman, Helpman, and Sabal ask what market failures arise in vertical supply chains with multiple production tiers, limited (non-anonymous) supply networks, arms-length transactions, and recurrent …

Klaus M Schmidt · Jonas von Wangenheim

Schmidt and von Wangenheim develop a dynamic model of organizational change in which workers have reference-dependent preferences — specifically loss aversion and social comparisons — to explain …

Yves Achdou · Francisco J. Buera · Jean-Michel Lasry · Pierre-Louis Lions · Benjamin Moll

Written explicitly to get mathematicians interested in macroeconomics, this review collects the systems of coupled nonlinear partial differential equations that arise once a macro model tracks a whole …

Fabio Bertolotti

This paper examines how anticipated changes in patent term affect R&D and innovation, using the U.S. ratification of the Trade-Related Aspects of Intellectual Property Rights (TRIPs) agreement in 1995 …

Nail Kashaev · Natalia Lazzati · Ruli Xiao

This paper develops a general nonparametric model of discrete choice in which peers influence agents through two distinct channels: (1) the set of alternatives an agent considers (consideration set …

Poorya Kabir · Eugene Tan · Ia Vardishvili

Standard measures of capital allocative efficiency—based on the dispersion of the average revenue product of capital (ARPK)—are severely biased when capital utilization is endogenous. When utilization …

Johnny Tang

This paper quantitatively assesses the consequences of jurisdictional competition in the US life insurance industry, an $8 trillion market. The central question is whether competition between state …

Clement Imbert · Gabriel Ulyssea

Does rural-urban migration increase or decrease urban informality, and through what mechanisms — and does the answer depend on the time horizon?

Dirk Bergemann · Tibor Heumann · Michael C. Wang

Bergemann, Heumann, and Wang study consumer surplus when a monopolist simultaneously engages in second-degree price discrimination (screening consumers within each market segment through …

Julio L. Ortiz

This paper investigates the macroeconomic consequences of widespread just-in-time (JIT) inventory management, documenting a fundamental trade-off: JIT raises firm profitability and reduces micro-level …

Agneta Berge · Ann-Sofie Kolm · Per Krusell

This paper asks whether a labor market with search-and-matching frictions and firms producing under decreasing returns to labor is better characterized by in-house hiring with intra-firm wage …

Nicola Mastrorocco · Edoardo Teso

Mastrorocco and Teso study how the internal organization of a state evolves during national development, framing state capacity as an organizational — specifically a principal-agent — problem. Using a …

Felipe Brugués

This paper studies the efficiency of self-enforced relational agreements in manufacturing supply chains when sellers have market power and contracts cannot be externally enforced. The setting is …

Ingrid Haegele

This paper provides the first empirical evidence of talent hoarding in organizations — the practice whereby managers deliberately suppress workers' internal mobility to retain productive team members, …

Ivan T Ivanov · Luke Pettit · Toni M Whited

Does corporate income taxation raise or lower corporate leverage? The canonical Modigliani-Miller (1963) view holds that the interest tax deduction makes debt more attractive, predicting a positive …

Michela Giorcelli · Bo Li

This paper estimates the causal effect of technology and knowledge transfers on early industrial development using the Sino-Soviet Alliance of the 1950s as a natural experiment. Between 1950 and 1957, …

Bryony Reich

This paper examines how the architecture of social networks shapes the success or failure of technology diffusion when adoption decisions exhibit strategic complementarities. The research question is: …

Zihao Li · Jonathan Libgober

This paper develops a dynamic principal-agent model in which a principal seeks to select exactly one project from a stream of possibilities emerging over time, while a biased agent (who wants any …

Michael Wiebe

This paper is a comment on Moretti (2021b), which studied agglomeration effects for innovation by testing whether the size of technology clusters causes patenting. The original paper (M21) used US …

Kim Ceulemans · Sarfraz Khan · John K. Wald

Two literatures predict opposite things about what happens to a country's pollution when it opens its equity market to foreign investors. Foreign institutional investors have been shown to push firms …

Luigi Iovino · Thorsten Martin · Julien Sauvagnat

This paper documents and quantifies an "environmental bias" embedded in the U.S. corporate income tax code: CO2-intensive ("dirty") firms systematically face lower effective tax rates than clean …

Isaac Baley · Andrés Blanco

How does partial capital irreversibility — arising from a wedge between the purchase price and the resale (discounted) price of capital — shape the persistence and amplitude of aggregate capital …

Clare Balboni · Robin Burgess · Benjamin A Olken

This paper studies the economics of illegal tropical forest fires in Indonesia, framed as a modern counterpart to Pigou's canonical externality example of sparks from railway engines. The central …

Natalia Emanuel · Emma Harrington · Amanda Pallais

This paper studies how physical proximity to coworkers affects on-the-job training and productivity, using software engineers at a Fortune 500 online retailer observed from 2019 to 2024. The authors …

Fumio Hayashi

Tobin's conjecture that investment depends on marginal q is derived from a general present-value-maximising firm problem with installation costs, giving an investment rule that depends on neither the …

Kieu-Trang Nguyen

This paper investigates whether and how a CEO's inherited generalized trust enhances innovation within firms, offering a micro-foundation for the well-documented macro-level relationship between …

Nirupama L Rao · Max Risch

This paper asks how independent (pass-through) businesses in the United States accommodate minimum wage increases — specifically whether they reduce employment, compress profits, pass costs through to …