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Modeling Firm and Market Dynamics: A Flexible Model Reproducing Existing Stylized Facts on Firm Growth

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  • Thomas Brenner

    (Philipps-Universitat Marburg)

  • Matthias Duschl

    (Philipps-Universitat Marburg)

Abstract

This paper presents a model of firm and market dynamics that is able to reproduce the empirically observed patterns on firm growth and its statistical characteristics. It goes beyond the existing firm models by reproducing all stylized facts established in the literature. Furthermore, the model is flexible in the sense that various parameter settings are identified that reproduce the stylized facts. We identify and discuss different ranges of the model’s parameters that allow for adapting the model to certain industries and life-cycle stages.

Suggested Citation

  • Thomas Brenner & Matthias Duschl, 2018. "Modeling Firm and Market Dynamics: A Flexible Model Reproducing Existing Stylized Facts on Firm Growth," Computational Economics, Springer;Society for Computational Economics, vol. 52(3), pages 745-772, October.
    • Handle: RePEc:kap:compec:v:52:y:2018:i:3:d:10.1007_s10614-017-9775-4
    DOI: 10.1007/s10614-017-9775-4
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    More about this item

    Keywords

    Firm model; Firm growth; Market model; Industry dynamics;
    All these keywords.

    JEL classification:

    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • L22 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Organization and Market Structure
    • L25 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Performance
    • O12 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Microeconomic Analyses of Economic Development
    • C15 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Statistical Simulation Methods: General

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