A stochastic analysis of firm dynamics: Their impact on the firm size distribution

Firm dynamics; Firm size distribution; Gibrat's law; Pareto; Steady-state; Transition probabilities; Distributed database systems; Dynamics; Pareto principle; Size distribution; Stochastic systems; Belgium; Firm size; Firm size distributions; Growth dynamics; Pareto distributions; Steady-state distributions; Stochastic analysis; Stochastic models

Abstract :

[en] The Pareto distribution is known for its wide range of applications, including the distribution of firm sizes. Exhaustive databases on firm sizes showed deviations from the Pareto firm size distribution for the smallest and largest firm sizes. Therefore, stochastic models of firm dynamics reproducing a Pareto firm size distribution could be further generalized in order to also reproduce these deviations. Based on Córdoba (2008), we build a model of firm dynamics which can generate a wide variety of steady-state distributions and we make clear the relationship between the growth dynamics of the firms and the resulting shape of the firm size distribution. To the light of our model, we analyse the links between the observed firm dynamics and the shape of firm size distribution in Belgium between 2006 and 2013. © 2021 Elsevier B.V.

Disciplines :

Special economic topics (health, labor, transportation...)

Author, co-author :

Reginster, Alexandre ; Université de Liège - ULiège

Language :

English

Title :

A stochastic analysis of firm dynamics: Their impact on the firm size distribution

Publication date :

2021

Journal title :

Physica A. Statistical Mechanics and its Applications

ISSN :

0378-4371

eISSN :

1873-2119

Publisher :

Elsevier, Netherlands

Volume :

570

Peer reviewed :

Peer Reviewed verified by ORBi

Available on ORBi :

since 04 August 2021

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