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Dependence of the decay rate of firm activities on firm age

Author

Listed:
  • Atushi Ishikawa

    (Kanazawa Gakuin University)

  • Shouji Fujimoto

    (Kanazawa Gakuin University)

  • Takayuki Mizuno

    (National Institute of Informatics
    The Graduate University for Advanced Studies [SOKENDAI]
    JST PRESTO)

  • Tsutomu Watanabe

    (University of Tokyo)

Abstract

Using the ORBIS database that contains around 150 million firm-size data from all over the world, we investigated firm activity data in Germany, Spain, France, the United Kingdom, Italy, Japan, Korea, and the Netherlands and found that the decay rate of firm activities does not depend on firm age in Spain as in Japan. But in Germany, France, the United Kingdom, Italy, Korea, and the Netherlands, the decay rate of young firms is high and becomes lower and settles at a constant value as firms age. By approximating the decay rate of firm activities by an exponential function, we analytically derived the firm age distribution under the assumptions that the number of firms that is established annually is nearly constant and that the decay rate of firm activities does not change annually. Using empirical data from eight countries, we compared the parameters estimated by the decay rate of the firm activities with those by firm age distribution. Except in Spain and Germany, the two kinds of parameters estimated in two different ways were close to each other.

Suggested Citation

  • Atushi Ishikawa & Shouji Fujimoto & Takayuki Mizuno & Tsutomu Watanabe, 2017. "Dependence of the decay rate of firm activities on firm age," Evolutionary and Institutional Economics Review, Springer, vol. 14(2), pages 351-362, December.
    • Handle: RePEc:spr:eaiere:v:14:y:2017:i:2:d:10.1007_s40844-017-0084-3
    DOI: 10.1007/s40844-017-0084-3
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    References listed on IDEAS

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    Cited by:

    1. Atushi Ishikawa & Shouji Fujimoto & Takayuki Mizuno, 2019. "Statistical law observed in inactive rate of firms," Evolutionary and Institutional Economics Review, Springer, vol. 16(1), pages 201-212, June.

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    More about this item

    Keywords

    Econophysics; Firm age distribution; Decay rate of firm activity; Dr. Jun-ichi Inoue;
    All these keywords.

    JEL classification:

    • D3 - Microeconomics - - Distribution

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