IDEAS home Printed from https://ideas.repec.org/
MyIDEAS: Login to save this article or follow this journal

Evolutionary model of the growth and size of firms

  • Kaldasch, Joachim

The key idea of this model is that firms are the result of an evolutionary process. Based on demand and supply considerations the evolutionary model presented here derives explicitly Gibrat’s law of proportionate effects as the result of the competition between products. Applying a preferential attachment mechanism for firms, the theory allows to establish the size distribution of products and firms. Also established are the growth rate and price distribution of consumer goods. Taking into account the characteristic property of human activities to occur in bursts, the model allows also an explanation of the size–variance relationship of the growth rate distribution of products and firms. Further the product life cycle, the learning (experience) curve and the market size in terms of the mean number of firms that can survive in a market are derived. The model also suggests the existence of an invariant of a market as the ratio of total profit to total revenue. The relationship between a neo-classic and an evolutionary view of a market is discussed. The comparison with empirical investigations suggests that the theory is able to describe the main stylized facts concerning the size and growth of firms.

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.

File URL: http://www.sciencedirect.com/science/article/pii/S0378437112000532
Download Restriction: Full text for ScienceDirect subscribers only. Journal offers the option of making the article available online on Science direct for a fee of $3,000

As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.

Article provided by Elsevier in its journal Physica A: Statistical Mechanics and its Applications.

Volume (Year): 391 (2012)
Issue (Month): 14 ()
Pages: 3751-3769

as
in new window

Handle: RePEc:eee:phsmap:v:391:y:2012:i:14:p:3751-3769
Contact details of provider: Web page: http://www.journals.elsevier.com/physica-a-statistical-mechpplications/

References listed on IDEAS
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.:

as in new window
  1. Kaldasch, Joachim, 2011. "Evolutionary Model of Non-Durable Markets," EconStor Preprints 50531, ZBW - German National Library of Economics.
  2. Peter Richmond & Sorin Solomon, 2000. "Power Laws are Boltzmann Laws in Disguise," Papers cond-mat/0010222, arXiv.org.
  3. Bottazzi, G. & Sapio, S. & Secchi, A., 2005. "Some statistical investigations on the nature and dynamics of electricity prices," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 355(1), pages 54-61.
  4. Sergey V. Buldyrev & Jakub Growiec & Fabio Pammolli & Massimo Riccaboni & H. Eugene Stanley, 2007. "The Growth of Business Firms: Facts and Theory," Journal of the European Economic Association, MIT Press, vol. 5(2-3), pages 574-584, 04-05.
  5. Kaldasch, Joachim, 2011. "Evolutionary model of an anonymous consumer durable market," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 390(14), pages 2692-2715.
  6. De Fabritiis, G. & Pammolli, F. & Riccaboni, M., 2003. "On size and growth of business firms," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 324(1), pages 38-44.
  7. Growiec, Jakub & Pammolli, Fabio & Riccaboni, Massimo & Stanley, H. Eugene, 2008. "On the size distribution of business firms," Economics Letters, Elsevier, vol. 98(2), pages 207-212, February.
  8. Banerjee, Anand & Yakovenko, Victor M. & Di Matteo, T., 2006. "A study of the personal income distribution in Australia," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 370(1), pages 54-59.
  9. Anand Banerjee & Victor M. Yakovenko & T. Di Matteo, 2006. "A study of the personal income distribution in Australia," Papers physics/0601176, arXiv.org.
  10. Jos\`e T. Lunardi & Salvatore Miccich\`e & Fabrizio Lillo & Rosario N. Mantegna & Mauro Gallegati, 2011. "Do firms share the same functional form of their growth rate distribution? A new statistical test," Papers 1103.2234, arXiv.org.
  11. repec:cup:cbooks:9780521191494 is not listed on IDEAS
  12. John Sutton, 1997. "Gibrat's Legacy," Journal of Economic Literature, American Economic Association, vol. 35(1), pages 40-59, March.
  13. Boris Podobnik & Davor Horvatic & Alexander M. Petersen & Branko Uro\v{s}evi\'c & H. Eugene Stanley, 2010. "Bankruptcy risk model and empirical tests," Papers 1011.2670, arXiv.org.
  14. Zhu Wang, 2008. "Income Distribution, Market Size and the Evolution of Industry," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 11(3), pages 542-565, July.
  15. Kaushik Matia & Dongfeng Fu & Sergey V. Buldyrev & Fabio Pammolli & Massimo Riccaboni & H. Eugene Stanley, 2005. "Statistical Properties of Business Firms Structure and Growth," Papers physics/0502081, arXiv.org.
  16. Fu, Dongfeng & Pammolli, Fabio & Buldyrev, Sergey V. & Riccaboni, Massimo & Matia, Kaushik & Yamasaki, Kazuko & Stanley, H. Eugene, 2005. "The Growth of Business Firms: Theoretical Framework and Empirical Evidence," MPRA Paper 15905, University Library of Munich, Germany.
  17. Victor M. Yakovenko & J. Barkley Rosser, 2009. "Colloquium: Statistical mechanics of money, wealth, and income," Papers 0905.1518, arXiv.org, revised Dec 2009.
Full references (including those not matched with items on IDEAS)

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

When requesting a correction, please mention this item's handle: RePEc:eee:phsmap:v:391:y:2012:i:14:p:3751-3769. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Zhang, Lei)

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.

This information is provided to you by IDEAS at the Research Division of the Federal Reserve Bank of St. Louis using RePEc data.