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The exponential age distribution and the Pareto firm size distribution

Author

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  • Alex Coad

    (Max Planck Institute of Economics, Jena, Germany)

Abstract

Recent work drawing on data for large and small firms has shown a Pareto distribution of firm size. We mix a Gibrat-type growth process among incumbents with an exponential distribution of firm's age, to obtain the empirical Pareto distribution.

Suggested Citation

  • Alex Coad, 2008. "The exponential age distribution and the Pareto firm size distribution," Jena Economics Research Papers 2008-072, Friedrich-Schiller-University Jena.
    • Handle: RePEc:jrp:jrpwrp:2008-072
    as

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    File URL: https://oweb.b67.uni-jena.de/Papers/jerp2008/wp_2008_072.pdf
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    References listed on IDEAS

    as
    1. Alex Coad, 2009. "The Growth of Firms," Books, Edward Elgar Publishing, number 13424.
    2. Reed, William J., 2001. "The Pareto, Zipf and other power laws," Economics Letters, Elsevier, vol. 74(1), pages 15-19, December.
    3. Ramsden, J.J. & Kiss-Haypál, Gy., 2000. "Company size distribution in different countries," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 277(1), pages 220-227.
    4. Alexander Coad & Jagannadha Pawan Tamvada, 2008. "The Growth and Decline of Small firms In Developing Countries," Papers on Economics and Evolution 2008-08, Philipps University Marburg, Department of Geography.
    5. Bernardo A. Huberman & Lada A. Adamic, 1999. "Growth dynamics of the World-Wide Web," Nature, Nature, vol. 401(6749), pages 131-131, September.
    6. Gaffeo, Edoardo & Gallegati, Mauro & Palestrini, Antonio, 2003. "On the size distribution of firms: additional evidence from the G7 countries," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 324(1), pages 117-123.
    7. Bernardo A. Huberman & Lada A. Adamic, 1999. "The Nature of Markets in the World Wide Web," Computing in Economics and Finance 1999 521, Society for Computational Economics.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Firm size distribution; Firm growth; Gibrat's Law; Pareto distribution; Zipf Law;
    All these keywords.

    JEL classification:

    • L20 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - General
    • L25 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Performance

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