The Opportunity Costs of Entrepreneurs in International Trade
Timothy J. Kehoe, Consultant
Kim J. Ruhl
July 2016 | Federal Reserve Bank of Minneapolis Staff Report 533
We show that a trade model with an exogenous set of heterogeneous firms with fixed operating costs has the same aggregate outcomes as a span-of-control model. Fixed costs in the heterogeneous-firm model are entrepreneurs’ forgone wage in the span-of-control model.
Published in: Economics Letters, 146 (2016): 1-3