Does Gibrat’s Law Hold for Retailing? Evidence from Sweden
AbstractGibrat’s Law predicts that firm growth is a purely random effect and therefore should be independent of firm size. The purpose of this paper is to test Gibrat’s law within the retail industry, using a novel data-set comprising all Swedish limited liability companies active at some point between 1998 and 2004. Very few studies have previously investigated whether Gibrat’s Law seems to hold for retailing, and they are based on highly aggregated data. Our results indicate that Gibrat´s Law can be rejected for a large majority of five-digit retail industries in Sweden, since small retail firms tend to grow faster than large ones.
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Bibliographic InfoPaper provided by The Ratio Institute in its series Ratio Working Papers with number 164.
Length: 33 pages
Date of creation: 08 Mar 2011
Date of revision:
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Postal: The Ratio Institute, P.O. Box 5095, SE-102 42 Stockholm, Sweden
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More information through EDIRC
firm dynamics; firm size; firm growth; retail;
Other versions of this item:
- Daunfeldt, Sven-Olov & Elert, Niklas & Lang, Åsa, 2011. "Does Gibrat’s Law Hold for Retailing? Evidence from Sweden," HUI Working Papers 47, HUI Research.
- L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
- L25 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Performance
- L81 - Industrial Organization - - Industry Studies: Services - - - Retail and Wholesale Trade; e-Commerce
This paper has been announced in the following NEP Reports:
- NEP-ALL-2011-03-19 (All new papers)
- NEP-BEC-2011-03-19 (Business Economics)
- NEP-COM-2011-03-19 (Industrial Competition)
- NEP-ENT-2011-03-19 (Entrepreneurship)
- NEP-EUR-2011-03-19 (Microeconomic European Issues)
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