Production, depreciation and the size distribution of firms
Many empirical researches indicate that firm size distributions in different industries or countries exhibit some similar characters. Among them the fact that many firm size distributions obey power-law especially for the upper end has been mostly discussed. Here we present an agent-based model to describe the evolution of manufacturing firms. Some basic economic behaviors are taken into account, which are production with decreasing marginal returns, preferential allocation of investments, and stochastic depreciation. The model gives a steady size distribution of firms which obey power-law. The effect of parameters on the power exponent is analyzed. The theoretical results are given based on both the Fokker–Planck equation and the Kesten process. They are well consistent with the numerical results.
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Volume (Year): 387 (2008)
Issue (Month): 13 ()
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Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Fujiwara, Yoshi & Aoyama, Hideaki & Di Guilmi, Corrado & Souma, Wataru & Gallegati, Mauro, 2004. "Gibrat and Pareto–Zipf revisited with European firms," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 344(1), pages 112-116.
- Yoshi Fujiwara & Corrado Di Guilmi & Hideaki Aoyama & Mauro Gallegati & Wataru Souma, 2003.
"Do Pareto-Zipf and Gibrat laws hold true? An analysis with European Firms,"
cond-mat/0310061, arXiv.org, revised Nov 2003.
- Fujiwara, Yoshi & Di Guilmi, Corrado & Aoyama, Hideaki & Gallegati, Mauro & Souma, Wataru, 2004. "Do Pareto–Zipf and Gibrat laws hold true? An analysis with European firms," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 335(1), pages 197-216.
- Guilmi, Corrado Di & Gallegati, Mauro & Ormerod, Paul, 2004. "Scaling invariant distributions of firms’ exit in OECD countries," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 334(1), pages 267-273.
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