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

Firm Diversification and the Law of Proportionate Effect

  • Giulio Bottazzi

The paper presents an analysis performed over the worldwide top 150 firms in the pharmaceutical industry. It begins with a test of the Gibrat's Law of Proportionate Effect finding, in line with previous literature, a violation concerning the variance of the growth. Then it shows, using disaggregated data on sub-markets (defined according to the ATC code) that this violation can be completely referred to the existence of a ``diversification'' effect, namely a scale relation between the number of active sub-markets a firm posses and its size. The observed scaling property of the firms diversification patterns is in contrast with the linear assumption typically made in literature. Finally, to interpret the findings, the work proposes a stochastic model for firms diversification which fits quite well the data.

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.lem.sssup.it/WPLem/files/2001-01.zip
Download Restriction: no

Paper provided by Laboratory of Economics and Management (LEM), Sant'Anna School of Advanced Studies, Pisa, Italy in its series LEM Papers Series with number 2001/01.

as
in new window

Length:
Date of creation: 12 Dec 2001
Date of revision:
Handle: RePEc:ssa:lemwps:2001/01
Contact details of provider: Postal: Piazza dei Martiri della Liberta, 33, 56127 Pisa
Phone: +39-50-883343
Fax: +39-50-883344
Web page: http://www.lem.sssup.it/
Email:


More information through EDIRC

No references listed on IDEAS
You can help add them by filling out this form.

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:ssa:lemwps:2001/01. 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: ()

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.