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Gibrat’s law in the trucking industry

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  • Andrew T. Balthrop

    (University of Arkansas)

Abstract

The distribution of firm size in the trucking industry is highly skewed, with a few firms accounting for a disproportionate share of transport. The distribution is also highly disperse so that firms have no characteristic size. This paper demonstrates that the distribution of firms sizes can be well approximated by the Zipf distribution. Such a distribution is consistent with a random growth process that is independent of firm size (Gibrat’s law). We use data from the Federal Motor Carrier Safety Administration in 2016 to demonstrate that the Zipf distribution provides a fit that is as good or better than other competing distributions, strongly supporting the model of random growth.

Suggested Citation

  • Andrew T. Balthrop, 2021. "Gibrat’s law in the trucking industry," Empirical Economics, Springer, vol. 61(1), pages 339-354, July.
    • Handle: RePEc:spr:empeco:v:61:y:2021:i:1:d:10.1007_s00181-020-01851-1
    DOI: 10.1007/s00181-020-01851-1
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    References listed on IDEAS

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    Cited by:

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    2. Sherzod B. Akhundjanov & Tatiana Drugova, 2022. "On the growth process of US agricultural land," Empirical Economics, Springer, vol. 63(3), pages 1727-1740, September.

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    More about this item

    Keywords

    Gibrat’s law; Transportation; Trucking; Power law; Pareto distribution; Scaling distribution; Fractal;
    All these keywords.

    JEL classification:

    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
    • L91 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Transportation: General
    • R40 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Transportation Economics - - - General
    • C46 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: Special Topics - - - Specific Distributions

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