Does Classical Competition Explain the Statistical Features of Firm Growth?
AbstractWe 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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Bibliographic InfoPaper provided by Christian-Albrechts-University of Kiel, Department of Economics in its series Economics Working Papers with number 2008,03.
Date of creation: 2008
Date of revision:
Statistical equilibrium; classical competition; maximum entropy; profit rates; firm growth rates; Subbotin distribution; Laplace distribution;
Other versions of this item:
- Alfarano, Simone & Milakovic, Mishael, 2008. "Does classical competition explain the statistical features of firm growth?," Economics Letters, Elsevier, vol. 101(3), pages 272-274, December.
- F01 - International Economics - - General - - - Global Outlook
- E10 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - General
- D21 - Microeconomics - - Production and Organizations - - - Firm Behavior: Theory
- L10 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - General
- C16 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Econometric and Statistical Methods; Specific Distributions
This paper has been announced in the following NEP Reports:
- NEP-ALL-2008-03-08 (All new papers)
- NEP-BEC-2008-03-08 (Business Economics)
- NEP-COM-2008-03-08 (Industrial Competition)
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