Power law distribution of the frequency of demises of US firms
Both theoretical and applied economics have a great deal to say about many aspects of the firm, but the literature on the extinctions, or demises, of firms is very sparse. We use a publicly available data base covering some 6 million firms in the US and show that the underlying statistical distribution which characterises the frequency of firm demises—the disappearances of firms as autonomous entities—is closely approximated by a power law. The exponent of the power law is, intriguingly, close to that reported in the literature on the extinction of biological species.
Volume (Year): 324 (2003)
Issue (Month): 1 ()
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