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A model for scaling in firms’ size and growth rate distribution

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  • Metzig, Cornelia
  • Gordon, Mirta B.
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    Abstract

    We introduce a simple agent-based model which allows us to analyze three stylized facts: a fat-tailed size distribution of companies, a ‘tent-shaped’ growth rate distribution, the scaling relation of the growth rate variance with firm size, and the causality between them. This is achieved under the simple hypothesis that firms compete for a scarce quantity (either aggregate demand or workforce) which is allocated probabilistically. The model allows us to relate size and growth rate distributions. We compare the results of our model to simulations with other scaling relationships, and to similar models and relate it to existing theory. Effects arising from binning data are discussed.

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    Bibliographic Info

    Article provided by Elsevier in its journal Physica A: Statistical Mechanics and its Applications.

    Volume (Year): 398 (2014)
    Issue (Month): C ()
    Pages: 264-279

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    Handle: RePEc:eee:phsmap:v:398:y:2014:i:c:p:264-279

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    Web page: http://www.journals.elsevier.com/physica-a-statistical-mechpplications/

    Related research

    Keywords: Power-law distribution; Tent-shape; Growth process; Superstatistics; Heavy-tailed distribution; Firm growth;

    References

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