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Convergence of corporate growth and Gibrat’s law in European electricity generation sectors

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  • Philipp Steinbrunner

    (University of Southern Denmark, Department of Business Economics and Sustainability, Management and Economics of Resources and Environment Research Group)

Abstract

In industrial development, the relationship between corporate growth and company size is essential because it influences convergence behavior and market concentration in a market. One important theory on this relationship is Gibrat’s law claiming that corporate growth is independent of company size. This study examines Gibrat’s law using an unbalanced panel covering European electricity generators from 2012 to 2020. The European electricity generation sector is interesting due to past liberalization and market integration, as well as capital-intensive production processes. Gibrat’s law is explored using $$ \sigma $$ σ -convergence, and unconditional and conditional $$ \beta $$ β -convergence. A battery of different measures for company size is employed. Moreover, the relationship between company size and the variance of growth processes is examined. Overall, European electricity generators converge in company size, rejecting Gibrat’s law. Additionally, the variance of growth processes is driven by firm size. Last, state ownership and renewable subsidies drive firm-level convergence speeds.

Suggested Citation

  • Philipp Steinbrunner, 2026. "Convergence of corporate growth and Gibrat’s law in European electricity generation sectors," Journal of Evolutionary Economics, Springer, vol. 36(2), pages 1-51, August.
    • Handle: RePEc:spr:joevec:v:36:y:2026:i:2:d:10.1007_s00191-026-00972-7
    DOI: 10.1007/s00191-026-00972-7
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    JEL classification:

    • L25 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Performance
    • L51 - Industrial Organization - - Regulation and Industrial Policy - - - Economics of Regulation
    • L94 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Electric Utilities
    • O12 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Microeconomic Analyses of Economic Development

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