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On the mean/variance relationship of the firm size distribution: evidence and some theory

Author

Listed:
  • Edoardo Gaffeo
  • Corrado di Guilmi
  • Mauro Gallegati
  • Alberto Russo

Abstract

In this paper we make use of firm-level data for a sample of European countries to prove the existence of a positive linear relationship between the mean and the variance of firms� size, an empirical regularity known in mathematical biology as the Taylor power law. A computerized experiment is used to show that the estimated slope of the linear relationship can be fruitfully employed to discriminate among alternative theories of firms� growth.

Suggested Citation

  • Edoardo Gaffeo & Corrado di Guilmi & Mauro Gallegati & Alberto Russo, 2008. "On the mean/variance relationship of the firm size distribution: evidence and some theory," Department of Economics Working Papers 0805, Department of Economics, University of Trento, Italia.
    • Handle: RePEc:trn:utwpde:0805
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    Cited by:

    1. Elisabetta De Antoni, 2009. "Money and finance: the heterodox views of R. Clower, A. Leijonhufvud and H. Minsky," Department of Economics Working Papers 0908, Department of Economics, University of Trento, Italia.
    2. Murat ATAN & Emre BOZDAĞ, 2011. "Avrupa Karbonatlı İçecekler Piyasasında Firma Büyüklüğü Ve Büyüklük Genişleme Oranı İlişkisi," Ekonomik Yaklasim, Ekonomik Yaklasim Association, vol. 22(80), pages 19-38.

    More about this item

    Keywords

    Taylor power law; Firm size distribution; Stochastic growth;
    All these keywords.

    JEL classification:

    • L1 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance

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