The CES distribution circle and its decoupling

We show for CES demands with heterogeneous production costs that profit, revenue, and output distributions lie in the same class as the productivity distribution (e.g., the "Pareto circle"), although the price distribution lies in the inverse class. We relate distribution shapes via the elasticities of their densities. Introducing product quality decouples the CES circle. Then, all distributions can lie in the same class. For instance, it becomes possible to reconcile Pareto price and Pareto profit distributions. We also describe discrete choice underpinnings for the representative consumer, and determine the equilibrium distribution of heterogeneous individual consumers’ welfare. JEL Classification: L13, F12