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Scaling invariant distributions of firms’ exit in OECD countries

  • Guilmi, Corrado Di
  • Gallegati, Mauro
  • Ormerod, Paul

Self-similar models are largely used to describe the extinction rate of biological species. In this paper we analyse the extinction rate of firms in eight OECD countries. Firms are classified by industrial sectors and sizes. We find that while a power-law distribution with exponent close to 2 fits the extinction rate very well by sector, a Weibull distribution is more appropriate if one analyses the firms’ size.

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File URL: http://www.sciencedirect.com/science/article/pii/S037843710300966X
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Article provided by Elsevier in its journal Physica A: Statistical Mechanics and its Applications.

Volume (Year): 334 (2004)
Issue (Month): 1 ()
Pages: 267-273

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Handle: RePEc:eee:phsmap:v:334:y:2004:i:1:p:267-273
Contact details of provider: Web page: http://www.journals.elsevier.com/physica-a-statistical-mechpplications/

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  1. Xavier Gabaix, 1999. "Zipf'S Law For Cities: An Explanation," The Quarterly Journal of Economics, MIT Press, vol. 114(3), pages 739-767, August.
  2. Gaffeo, Edoardo & Gallegati, Mauro & Giulioni, Gianfranco & Palestrini, Antonio, 2003. "Power laws and macroeconomic fluctuations," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 324(1), pages 408-416.
  3. William Cook & Paul Ormerod, 2002. "Power Law Distribution of the Frequency of Demises of U.S Firms," Papers cond-mat/0212186, arXiv.org.
  4. De Vany, Arthur & Walls, W David, 1996. "Bose-Einstein Dynamics and Adaptive Contracting in the Motion Picture Industry," Economic Journal, Royal Economic Society, vol. 106(439), pages 1493-1514, November.
  5. Di Guilmi, Corrado & Gaffeo, Edoardo & Gallegati, Mauro, 2004. "Empirical results on the size distribution of business cycle phases," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 333(C), pages 325-334.
  6. repec:cup:cbooks:9780521437899 is not listed on IDEAS
  7. Canning, D. & Amaral, L. A. N. & Lee, Y. & Meyer, M. & Stanley, H. E., 1998. "Scaling the volatility of GDP growth rates," Economics Letters, Elsevier, vol. 60(3), pages 335-341, September.
  8. Y. Malevergne & V. F. Pisarenko & D. Sornette, 2003. "Empirical Distributions of Log-Returns: between the Stretched Exponential and the Power Law?," Papers physics/0305089, arXiv.org.
  9. 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.
  10. Ormerod, Paul & Mounfield, Craig, 2001. "Power law distribution of the duration and magnitude of recessions in capitalist economies: breakdown of scaling," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 293(3), pages 573-582.
  11. Martha A. Schary, 1991. "The Probability of Exit," RAND Journal of Economics, The RAND Corporation, vol. 22(3), pages 339-353, Autumn.
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