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Bimodality in the firm size distributions: a kinetic exchange model approach

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  • Anindya S. Chakrabarti
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    Abstract

    Firm growth process in the developing economies is known to produce divergence in their growth path giving rise to bimodality in the size distribution. Similar bimodality has been observed in wealth distribution as well. Here, we introduce a modified kinetic exchange model which can reproduce such features. In particular, we will show numerically that a nonlinear retention rate (or savings propensity) causes this bimodality. This model can accommodate binary trading as well as the whole system-side trading thus making it more suitable to explain the non-standard features of wealth distribution as well as firm size distribution.

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    File URL: http://arxiv.org/pdf/1302.3818
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    Bibliographic Info

    Paper provided by arXiv.org in its series Papers with number 1302.3818.

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    Date of creation: Feb 2013
    Date of revision: May 2013
    Handle: RePEc:arx:papers:1302.3818

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    2. Massimo Riccaboni & Fabio Pammolli & Sergey V. Buldyrev & Linda Ponta & H. Eugene Stanley, 2009. "The Size Variance Relationship of Business Firm Growth Rates," DISA Working Papers, Department of Computer and Management Sciences, University of Trento, Italy 0901, Department of Computer and Management Sciences, University of Trento, Italy, revised 11 Jun 2009.
    3. Arnab Chatterjee & Bikas K. Chakrabarti, 2007. "Kinetic Exchange Models for Income and Wealth Distributions," Papers 0709.1543, arXiv.org, revised Nov 2007.
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    7. Xavier Sala-i-Martin, 2006. "The World Distribution of Income: Falling Poverty and ... Convergence, Period," The Quarterly Journal of Economics, MIT Press, MIT Press, vol. 121(2), pages 351-397, May.
    8. Victor M. Yakovenko & J. Barkley Rosser, 2009. "Colloquium: Statistical mechanics of money, wealth, and income," Papers 0905.1518, arXiv.org, revised Dec 2009.
    9. Fujiwara, Yoshi & Di Guilmi, Corrado & Aoyama, Hideaki & Gallegati, Mauro & Souma, Wataru, 2004. "Do Pareto–Zipf and Gibrat laws hold true? An analysis with European firms," Physica A: Statistical Mechanics and its Applications, Elsevier, Elsevier, vol. 335(1), pages 197-216.
    10. Quah, Danny T, 1996. "Twin Peaks: Growth and Convergence in Models of Distribution Dynamics," Economic Journal, Royal Economic Society, Royal Economic Society, vol. 106(437), pages 1045-55, July.
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    13. A. Chatterjee & B. K. Chakrabarti, 2007. "Kinetic exchange models for income and wealth distributions," The European Physical Journal B - Condensed Matter and Complex Systems, Springer, Springer, vol. 60(2), pages 135-149, November.
    14. Aoyama, Hideaki & Fujiwara, Yoshi & Souma, Wataru, 2004. "Kinematics and dynamics of Pareto–Zipf's law and Gibrat's law," Physica A: Statistical Mechanics and its Applications, Elsevier, Elsevier, vol. 344(1), pages 117-121.
    15. Danny Quah, 1996. "Twin Peaks: Growth and Convergence in Models of Distribution Dynamics," CEP Discussion Papers, Centre for Economic Performance, LSE dp0280, Centre for Economic Performance, LSE.
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