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Does classical competition explain the statistical features of firm growth?

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  • Alfarano, Simone
  • Milakovic, Mishael

Abstract

We propose 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 firm growth rates.

Suggested Citation

  • 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.
    • Handle: RePEc:eee:ecolet:v:101:y:2008:i:3:p:272-274
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    6. Gatti, Domenico Delli & Guilmi, Corrado Di & Gaffeo, Edoardo & Giulioni, Gianfranco & Gallegati, Mauro & Palestrini, Antonio, 2005. "A new approach to business fluctuations: heterogeneous interacting agents, scaling laws and financial fragility," Journal of Economic Behavior & Organization, Elsevier, vol. 56(4), pages 489-512, April.
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    More about this item

    Keywords

    Statistical equilibrium Classical competition Maximum entropy Profit rates Firm growth rates Subbotin distribution Laplace distribution;

    JEL classification:

    • 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

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