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Title:Does Classical Competition Explain the Statistical Features of Firm Growth? PDF Logo
Authors:Alfarano, Simone
Milaković, Mishael
Issue Date:2008
Series/Report no.:Economics working paper / Christian-Albrechts-Universität Kiel, Department of Economics 2008,03
Abstract:We express the idea of classical competition in a statistical equilibrium model, where the tendency for competition to equalize profit rates results in an exponential power (or Subbotin) distribution. The model supports and extends recent evidence on the Laplace distribution of growth rates in firm size. We also find tent-shaped distributions in the size growth rates of Forbes Global 2000 companies, which we interpret as preliminary evidence in favor of the hypothesis that classical competition is a globally operating mechanism.
Subjects:Statistical equilibrium
classical competition
maximum entropy
profit rates
firm growth rates
Subbotin distribution
Laplace distribution
JEL:F01
E10
D21
L10
C16
Document Type:Working Paper
Appears in Collections:Economics Working Papers, Department of Economics, CAU Kiel

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