A generalized preferential attachment model for business firms growth rates. I. Empirical evidence.

DOI10.1140/EPJB/E2007-00133-4zbMATH Open1189.91100arXivphysics/0609011OpenAlexW2153121027WikidataQ111628945 ScholiaQ111628945MaRDI QIDQ978798FDOQ978798

J. Martínez

Publication date: 25 June 2010

Published in: The European Physical Journal B. Condensed Matter and Complex Systems (Search for Journal in Brave)

Abstract: We introduce a model of proportional growth to explain the distribution $P(g)$ of business firm growth rates. The model predicts that $P(g)$ is Laplace in the central part and depicts an asymptotic power-law behavior in the tails with an exponent $zeta=3$. Because of data limitations, previous studies in this field have been focusing exclusively on the Laplace shape of the body of the distribution. We test the model at different levels of aggregation in the economy, from products, to firms, to countries, and we find that the its predictions are in good agreement with empirical evidence on both growth distributions and size-variance relationships.

Full work available at URL: https://arxiv.org/abs/physics/0609011

Mathematics Subject Classification ID

Applications of statistical and quantum mechanics to economics (econophysics) (91B80) Economic growth models (91B62) Time-dependent statistical mechanics (dynamic and nonequilibrium) (82C99)

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Cited In (6)

• Do firms share the same functional form of their growth rate distribution? A statistical test
• Preferential growth: solution and application to modeling stock market
• A statistical equilibrium model of competitive firms
• Generalised central limit theorems for growth rate distribution of complex systems
• Firm growth function and extended-Gibrat's property
• Business size distributions

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