The Growth of Business Firms: Theoretical Framework and Empirical Evidence
AbstractWe introduce a model of proportional growth to explain the distribution of business firm growth rates. The model predicts that the distribution is exponential in the central part and depicts an asymptotic power-law behavior in the tails with an exponent 3. Because of data limitations, previous studies in this field have been focusing exclusively on the Laplace shape of the body of the distribution. In this article, we test the model at different levels of aggregation in the economy, from products to firms to countries, and we find that the model's predictions agree with empirical growth distributions and size-variance relationships.
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Bibliographic InfoPaper provided by arXiv.org in its series Papers with number physics/0512005.
Date of creation: Dec 2005
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Web page: http://arxiv.org/
Other versions of this item:
- Fu, Dongfeng & Pammolli, Fabio & Buldyrev, Sergey V. & Riccaboni, Massimo & Matia, Kaushik & Yamasaki, Kazuko & Stanley, H. Eugene, 2005. "The Growth of Business Firms: Theoretical Framework and Empirical Evidence," MPRA Paper 15905, University Library of Munich, Germany.
- D21 - Microeconomics - - Production and Organizations - - - Firm Behavior: Theory
- L25 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Performance
- O47 - Economic Development, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Measurement of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence
- D39 - Microeconomics - - Distribution - - - Other
- E01 - Macroeconomics and Monetary Economics - - General - - - Measurement and Data on National Income and Product Accounts and Wealth; Environmental Accounts
- L00 - Industrial Organization - - General - - - General
- L - Industrial Organization
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