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The Firm Size Distribution and Inter-Industry Diversification

Author

Listed:
  • John Hutchinson

    (European Central Bank)

  • Jozef Konings

    (Economics Department, K.U. Leuven)

  • Patrick Paul Walsh

    (SPIRe and The Geary Institute University College Dublin)

Abstract

We show that the stylized facts of the Firm Size Distribution (FSD) by age cohorts, as shown in Cabral and Mata (2003), bind within 4-digit manufacturing industries in the UK and Belgium. As in Klepper and Thompson (2006) and Sutton (1998), we explore whether time to build a portfolio of products is a mechanism that relates age to firm size. While inter industry diversification, to some extent, accounts for the role of age, we find that the presence of economies of scope has a separate impact on firm size when controlling for age, amongst other factors. Using the techniques in Cabral and Mata's we show that the FSD by degrees of product diversification shifts to the right, but more so in older age groups. This shows a role for inter-industry diversification over and above an age effect.

Suggested Citation

  • John Hutchinson & Jozef Konings & Patrick Paul Walsh, 2009. "The Firm Size Distribution and Inter-Industry Diversification," Working Papers 200926, Geary Institute, University College Dublin.
    • Handle: RePEc:ucd:wpaper:200926
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    Cited by:

    1. is not listed on IDEAS
    2. Johannes Boehm & Swati Dhingra & John Morrow, 2022. "The Comparative Advantage of Firms," Journal of Political Economy, University of Chicago Press, vol. 130(12), pages 3025-3100.
    3. repec:spo:wpecon:info:hdl:2441/1dn2prktaq9p3949il1h9ds86b is not listed on IDEAS
    4. Antonio Palestrini, 2015. "Firm Size Distribution and the Survival Bias," Economics Bulletin, AccessEcon, vol. 35(3), pages 1630-1637.
    5. Bronzini, Raffaello & Giunta, Anna & Pierucci, Eleonora & Sforza, Marco, 2025. "More technology, more loans? How advanced digital technologies influence firms’ financing conditions," Structural Change and Economic Dynamics, Elsevier, vol. 72(C), pages 47-66.
    6. repec:spo:wpmain:info:hdl:2441/1dn2prktaq9p3949il1h9ds86b is not listed on IDEAS
    7. Christos Axioglou & Nicos Christodoulakis, 2021. "Which firms survive in a crisis? Investigating Gibrat’s Law in Greece 2001–2014," Economia e Politica Industriale: Journal of Industrial and Business Economics, Springer;Associazione Amici di Economia e Politica Industriale, vol. 48(2), pages 159-217, June.
    8. Gemunu Nanayakkara & Lokman Mia, 2016. "Does product diversification and emphasis on profitability in microfinancing alleviate poverty?," Asia-Pacific Development Journal, United Nations Economic and Social Commission for Asia and the Pacific (ESCAP), vol. 23(1), pages 21-56, June.

    More about this item

    JEL classification:

    • L10 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - General
    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
    • L16 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Industrial Organization and Macroeconomics; Macroeconomic Industrial Structure

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