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An evolutionary model of the size distribution of firms

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  • Fariba Hashemi

    (Ecole Polytechnique F, d, rale de Lausanne, 1015 Lausanne, Switzerland)

Abstract

An analytical study of the evolution of the distribution of firm size in an industry is presented. A drift-diffusion model is proposed to express the time-evolution of density of firm size within the industry. The model blends the conventional, more or less static, determinants with the kinds of dynamic considerations introduced by stochastic processes of evolutionary dynamics. The steady-state distribution as well as the dynamic behavior of the model are derived. Parameters in the resulting analytical expressions are then fit to a population of firms in the non-manufacturing service sector. The empirical portion of the paper validates the proposed evolutionary model.

Suggested Citation

  • Fariba Hashemi, 2000. "An evolutionary model of the size distribution of firms," Journal of Evolutionary Economics, Springer, vol. 10(5), pages 507-521.
    • Handle: RePEc:spr:joevec:v:10:y:2000:i:5:p:507-521
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    Citations

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    Cited by:

    1. Ying Fan & Menghui Li & Zengru Di, 2004. "Increasing Returns to Scale, Dynamics of Industrial Structure and Size Distribution of Firms," Papers cond-mat/0407383, arXiv.org.
    2. Stankov, Petar & Vasilev, Aleksandar, 2015. "What Explains the Diversity of Regulatory Reform Outcomes?," EconStor Research Reports 141915, ZBW - Leibniz Information Centre for Economics.
    3. Ausloos, M. & Petroni, F., 2009. "Statistical dynamics of religion evolutions," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 388(20), pages 4438-4444.
    4. Christian Cordes & Tong-Yaa Su & Pontus Strimling, 2019. "A critical human group size and firm size distributions in industries," Journal of Bioeconomics, Springer, vol. 21(2), pages 123-144, July.
    5. Stankov, Petar & Vasilev, Aleksandar, 2019. "Business reform outcomes: Why so different?," Journal of Policy Modeling, Elsevier, vol. 41(6), pages 1109-1127.

    More about this item

    Keywords

    Industry evolution - Evolutionary dynamics - Size distribution of firms - Diffusion processes - Learning - Imitation - Incomplete information - Bounded rationality - Survival analysis;

    JEL classification:

    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms

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