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Company size distribution for developing countries

Author

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  • Hernández-Pérez, R.
  • Angulo-Brown, F.
  • Tun, Dionisio

Abstract

We analyze company size distribution for developing countries using the framework proposed by Ramsden and Kiss-Haypál [Physica A 277 (2000) 220]. Although this distribution does not fit developing countries data as good as it does to developed ones, the parameters of the distribution (θ and ρ) for developing countries are remarkably different to those for developed countries. This result supports the hypothesis that parameter θ plays a role analogous to the temperature of the economy, which could be related to the level of economic development, as reported previously by Saslow [Am. J. Phys. 67 (1999) 1239]. Also, this supports the hypothesis that ρ is related to the competitive exclusion in economics, as ρ tending to zero implies the competition free limit case where company size distribution is predicted to be a power-law, as reported by Takayasu and Okuyama [Fractals 6 (1998) 67]. Finally, we report the goodness of fit for two functions: a finite-size scaling and a log–normal. We found that these functions fit the data better in some cases. However, this is not in itself sufficient evidence that those functions are an appropriate representation of the phenomenon.

Suggested Citation

  • Hernández-Pérez, R. & Angulo-Brown, F. & Tun, Dionisio, 2006. "Company size distribution for developing countries," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 359(C), pages 607-618.
  • Handle: RePEc:eee:phsmap:v:359:y:2006:i:c:p:607-618
    DOI: 10.1016/j.physa.2005.04.027
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    References listed on IDEAS

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    1. L. A. N. Amaral & S. V. Buldyrev & S. Havlin & H. Leschhorn & P. Maass & M. A. Salinger & H. E. Stanley & M. H. R. Stanley, 1997. "Scaling behavior in economics: I. Empirical results for company growth," Papers cond-mat/9702082, arXiv.org.
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    3. Ramsden, J.J. & Kiss-Haypál, Gy., 2000. "Company size distribution in different countries," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 277(1), pages 220-227.
    4. Stanley, H.E. & Amaral, L.A.N. & Gabaix, X. & Gopikrishnan, P. & Plerou, V., 2001. "Similarities and differences between physics and economics," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 299(1), pages 1-15.
    5. D'Hulst, R. & Rodgers, G.J., 2001. "Business size distributions," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 299(1), pages 328-333.
    6. Gaffeo, Edoardo & Gallegati, Mauro & Palestrini, Antonio, 2003. "On the size distribution of firms: additional evidence from the G7 countries," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 324(1), pages 117-123.
    7. Okuyama, K & Takayasu, M & Takayasu, H, 1999. "Zipf's law in income distribution of companies," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 269(1), pages 125-131.
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    Cited by:

    1. Kang, Sang Hoon & Jiang, Zhuhua & Cheong, Chongcheul & Yoon, Seong-Min, 2011. "Changes of firm size distribution: The case of Korea," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 390(2), pages 319-327.
    2. Gao, Baojun & Chan, Wai Kin (Victor) & Li, Hongyi, 2015. "On the increasing inequality in size distribution of China's listed companies," China Economic Review, Elsevier, vol. 36(C), pages 25-41.
    3. Pascoal, Rui & Augusto, Mário & Monteiro, A.M., 2016. "Size distribution of Portuguese firms between 2006 and 2012," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 458(C), pages 342-355.
    4. Luis Garicano & Claire Lelarge & John Van Reenen, 2016. "Firm Size Distortions and the Productivity Distribution: Evidence from France," American Economic Review, American Economic Association, vol. 106(11), pages 3439-3479, November.
    5. Bloom, Nicholas & Sadun, Raffaella & Lemos, Renata & Scur, Daniela & Van Reenen, John, 2014. "The new empirical economics of management," LSE Research Online Documents on Economics 58009, London School of Economics and Political Science, LSE Library.
    6. repec:spr:jeicoo:v:12:y:2017:i:1:d:10.1007_s11403-015-0152-x is not listed on IDEAS
    7. Guo, Jinzhong & Xu, Qi & Chen, Qinghua & Wang, Yougui, 2013. "Firm size distribution and mobility of the top 500 firms in China, the United States and the world," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 392(13), pages 2903-2914.
    8. Hernández-Pérez, R., 2010. "An analogy of the size distribution of business firms with Bose–Einstein statistics," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 389(18), pages 3837-3843.

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    Keywords

    Econophysics; Company size; Zipf law; Power-law;

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