Power law distribution of the frequency of demises of US firms

William Cook and Paul Ormerod ()

Physica A: Statistical Mechanics and its Applications, 2003, vol. 324, issue 1, 207-212

Abstract: Both theoretical and applied economics have a great deal to say about many aspects of the firm, but the literature on the extinctions, or demises, of firms is very sparse. We use a publicly available data base covering some 6 million firms in the US and show that the underlying statistical distribution which characterises the frequency of firm demises—the disappearances of firms as autonomous entities—is closely approximated by a power law. The exponent of the power law is, intriguingly, close to that reported in the literature on the extinction of biological species.

Date: 2003
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Working Paper: Power Law Distribution of the Frequency of Demises of U.S Firms (2002)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:phsmap:v:324:y:2003:i:1:p:207-212

DOI: 10.1016/S0378-4371(02)01955-6

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