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Does Gibrat’s Law Hold for Retailing? Evidence from Sweden

Author

Listed:
  • Daunfeldt, Sven-Olov

    (The Ratio Institute and Dalarna University)

  • Elert, Niklas

    (The Ratio Institute and Dalarna University)

  • Lang, Åsa

    (Dalarna University and Mid Sweden University)

Abstract

Gibrat’s Law predicts that firm growth is a purely random effect and therefore should be independent of firm size. The purpose of this paper is to test Gibrat’s law within the retail industry, using a novel data-set comprising all Swedish limited liability companies active at some point between 1998 and 2004. Very few studies have previously investigated whether Gibrat’s Law seems to hold for retailing, and they are based on highly aggregated data. Our results indicate that Gibrat´s Law can be rejected for a large majority of five-digit retail industries in Sweden, since small retail firms tend to grow faster than large ones.

Suggested Citation

  • Daunfeldt, Sven-Olov & Elert, Niklas & Lang, Åsa, 2011. "Does Gibrat’s Law Hold for Retailing? Evidence from Sweden," Ratio Working Papers 164, The Ratio Institute.
    • Handle: RePEc:hhs:ratioi:0164
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    Cited by:

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    2. Tang, Ali, 2014. "Does Gibrat’s Law Hold for Swedish Energy Firms?," HUI Working Papers 99, HUI Research.
    3. Marko Peric & Vanja Vitezic, 2016. "Impact of global economic crisis on firm growth," Small Business Economics, Springer, vol. 46(1), pages 1-12, January.
    4. Marko Peric & Vanja Vitezic, 2016. "Impact of global economic crisis on firm growth," Small Business Economics, Springer, vol. 46(1), pages 1-12, January.
    5. Yujiao Li & Johan Håkansson & Oana Mihaescu & Niklas Rudholm, 2019. "Agglomeration economies in urban retailing: are there productivity spillovers when big-box retailers enter urban markets?," Applied Economics Letters, Taylor & Francis Journals, vol. 26(19), pages 1586-1589, November.
    6. Aili Tang, 2015. "Does Gibrat’s law hold for Swedish energy firms?," Empirical Economics, Springer, vol. 49(2), pages 659-674, September.
    7. Macuchova, Zuzana & Rudholm, Niklas & Tang, Aili, 2014. "Firm growth in the Swedish energy sector: Will large firms become even more dominant?," HUI Working Papers 104, HUI Research.

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    More about this item

    Keywords

    firm dynamics; firm size; firm growth; retail;
    All these keywords.

    JEL classification:

    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
    • L25 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Performance
    • L81 - Industrial Organization - - Industry Studies: Services - - - Retail and Wholesale Trade; e-Commerce

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