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Diversity of firm sizes, complexity, and industry structure in the Chinese economy

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  • Heinrich, Torsten
  • Dai, Shuanping

Abstract

Among the phenomena in economics that are not yet well-understood is the fat-tailed (power-law) distribution of firm sizes in the world´s economies. Different mechanisms suggested in the literature to explain this distribution of firm sizes are discussed in the present paper. The paper uses the China Industrial Enterprises Database to study the distribution (firm size in terms of the number of employees, capital, and gross profit) for the provinces of China for the years 1998-2008. We estimate the power-law distribution and confirm its plausibility using the KS test and the log-likelihood ratio vs. lognormal and exponential distributions. The analysis on regional levels allows an assessment of regional effects on differences in the distribution; we discuss possible explanations for the observed patterns in the light of the recent regional economic development in the PRC.

Suggested Citation

  • Heinrich, Torsten & Dai, Shuanping, 2015. "Diversity of firm sizes, complexity, and industry structure in the Chinese economy," Working Papers on East Asian Studies 107/2015, University of Duisburg-Essen, Institute of East Asian Studies IN-EAST.
  • Handle: RePEc:zbw:udedao:1072015
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Cortés, Lina M. & Mora-Valencia, Andrés & Perote, Javier, 2017. "Measuring firm size distribution with semi-nonparametric densities," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 485(C), pages 35-47.
    2. Heinrich, Torsten, 2016. "The Narrow and the Broad Approach to Evolutionary Modeling in Economics," MPRA Paper 75797, University Library of Munich, Germany.

    More about this item

    Keywords

    firm size distribution; evolutionary industry dynamics; power-law distribution; China;

    JEL classification:

    • B52 - Schools of Economic Thought and Methodology - - Current Heterodox Approaches - - - Historical; Institutional; Evolutionary
    • C14 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Semiparametric and Nonparametric Methods: General
    • C46 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: Special Topics - - - Specific Distributions
    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
    • N15 - Economic History - - Macroeconomics and Monetary Economics; Industrial Structure; Growth; Fluctuations - - - Asia including Middle East

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