IDEAS home Printed from https://ideas.repec.org/a/rje/randje/v37y20062p235-256.html
   My bibliography  Save this article

Explaining the Distribution of Firm Growth Rates

Author

Listed:
  • Giulio Bottazzi

    (St. Anna School for Advanced Studies)

  • Angelo Secchi

    (LEM Scuola Superiore Sant'Anna)

Abstract

Empirical analyses on aggregated datasets have revealed a common exponential behavior in the shape of the probability density of corporate growth rates. We present clear-cut evidence on this topic using disaggregated data. We explain the observed regularities proposing a model in which firms' ability to take up new business opportunities increases with the number of opportunities already exploited. A theoretical result is presented for the limiting case in which the number of firms and opportunities go to infinity. Moreover, using simulations, we show that even in a small industry the agreement with asymptotic results is almost complete.

Suggested Citation

  • Giulio Bottazzi & Angelo Secchi, 2006. "Explaining the Distribution of Firm Growth Rates," RAND Journal of Economics, The RAND Corporation, vol. 37(2), pages 235-256, Summer.
    • Handle: RePEc:rje:randje:v:37:y:2006:2:p:235-256
    as

    Download full text from publisher

    To our knowledge, this item is not available for download. To find whether it is available, there are three options:
    1. Check below whether another version of this item is available online.
    2. Check on the provider's web page whether it is in fact available.
    3. Perform a search for a similarly titled item that would be available.

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Alessandra Colombelli & Francesco Quatraro, 2014. "The persistence of firms' knowledge base: a quantile approach to Italian data," Economics of Innovation and New Technology, Taylor & Francis Journals, vol. 23(7), pages 585-610, October.
    2. Gianluca Pallante & Mattia Guerini & Mauro Napoletano & Andrea Roventini, 2024. "Robust-less-fragile: Tackling Systemic Risk and Financial Contagion in a Macro Agent-Based Model," LEM Papers Series 2024/08, Laboratory of Economics and Management (LEM), Sant'Anna School of Advanced Studies, Pisa, Italy.
    3. Einar Erlingsson & Simone Alfarano & Marco Raberto & Hlynur Stefánsson, 2013. "On the distributional properties of size, profit and growth of Icelandic firms," Journal of Economic Interaction and Coordination, Springer;Society for Economic Science with Heterogeneous Interacting Agents, vol. 8(1), pages 57-74, April.
    4. Philipp Mundt & Simone Alfarano & Mishael Milakovic, 2016. "Gibrat’s Law Redux: think profitability instead of growth," Industrial and Corporate Change, Oxford University Press and the Associazione ICC, vol. 25(4), pages 549-571.
    5. Metzig, Cornelia & Gordon, Mirta B., 2014. "A model for scaling in firms’ size and growth rate distribution," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 398(C), pages 264-279.
    6. Russell Golman & Steven Klepper, 2016. "Spinoffs and clustering," RAND Journal of Economics, RAND Corporation, vol. 47(2), pages 341-365, May.
    7. Giorgio Barba Navaretti & Davide Castellani & Fabio Pieri, 2014. "Age and firm growth: evidence from three European countries," Small Business Economics, Springer, vol. 43(4), pages 823-837, December.
    8. Lunardi, José T. & Miccichè, Salvatore & Lillo, Fabrizio & Mantegna, Rosario N. & Gallegati, Mauro, 2014. "Do firms share the same functional form of their growth rate distribution? A statistical test," Journal of Economic Dynamics and Control, Elsevier, vol. 39(C), pages 140-164.
    9. Severin Reissl & Luca E. Fierro & Francesco Lamperti & Andrea Roventini, 2024. "The DSK-SFC stock-flow consistent agent-based integrated assessment model," LEM Papers Series 2024/09, Laboratory of Economics and Management (LEM), Sant'Anna School of Advanced Studies, Pisa, Italy.
    10. Belso-Martinez, Jose A. & Molina-Morales, F. Xavier & Mas-Verdu, Francisco, 2013. "Combining effects of internal resources, entrepreneur characteristics and KIS on new firms," Journal of Business Research, Elsevier, vol. 66(10), pages 2079-2089.
    11. Alfarano, Simone & Milakovic, Mishael, 2008. "Does classical competition explain the statistical features of firm growth?," Economics Letters, Elsevier, vol. 101(3), pages 272-274, December.
    12. Matthias Duschl & Thomas Brenner, 2011. "Characteristics of Regional Industry-specific Employment Growth – Empirical Evidence for Germany," Working Papers on Innovation and Space 2011-07, Philipps University Marburg, Department of Geography.
    13. repec:hal:wpspec:info:hdl:2441/9848 is not listed on IDEAS
    14. repec:spo:wpecon:info:hdl:2441/9848 is not listed on IDEAS
    15. Colombelli, Alessandra & Haned, Naciba & Le Bas, Christian, 2013. "On firm growth and innovation: Some new empirical perspectives using French CIS (1992–2004)," Structural Change and Economic Dynamics, Elsevier, vol. 26(C), pages 14-26.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:rje:randje:v:37:y:2006:2:p:235-256. See general information about how to correct material in RePEc.

    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.

    We have no bibliographic references for this item. You can help adding them by using 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 RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: the person in charge (email available below). General contact details of provider: https://www.rje.org .

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

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.