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Does Classical Competition Explain the Statistical Features of Firm Growth?

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Author Info
Alfarano, Simone
Milakovic, Mishael

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Abstract

We express the idea of classical competition in a statistical equilibrium model, where the tendency for competition to equalize profit rates results in an exponential power (or Subbotin) distribution. The model supports and extends recent evidence on the Laplace distribution of growth rates in firm size. We also find tent-shaped distributions in the size growth rates of Forbes Global 2000 companies, which we interpret as preliminary evidence in favor of the hypothesis that classical competition is a globally operating mechanism. --

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File URL: http://econstor.eu/bitstream/10419/22051/1/EWP-2008-03.pdf
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Paper provided by Christian-Albrechts-University of Kiel, Department of Economics in its series Economics Working Papers with number 2008,03.

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Date of creation: 2008
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Handle: RePEc:zbw:cauewp:7022

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Web page: http://www.wiso.uni-kiel.de/econ/

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Related research
Keywords: Statistical equilibrium; classical competition; maximum entropy; profit rates; firm growth rates; Subbotin distribution; Laplace distribution;

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Find related papers by JEL classification:
F01 - International Economics - - General - - - Global Outlook
E10 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - General
D21 - Microeconomics - - Production and Organizations - - - Firm Behavior
L10 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - General
C16 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: General - - - Econometric and Statistical Methods; Specific Distributions

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This page was last updated on 2009-11-27.


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