A Generalized Preferential Attachment Model for Business Firms Growth Rates: I. Empirical Evidence

Fabio Pammolli (), Dongfeng Fu, Sergey V. Buldyrev, Massimo Riccaboni (), Kaushik Matia, Kazuko Yamasaki and H. Eugene Stanley

MPRA Paper from University Library of Munich, Germany

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 ζ = 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.

Keywords: Gibrat Law; Firm Growth; Size Distribution (search for similar items in EconPapers)
JEL-codes: D21 L25 E01 L00 L60 L65 L16 E17 (search for similar items in EconPapers)
Date: Written
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Published in The European Physical Journal B 2.57(2007): pp. 127-130

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Working Paper: A Generalized Preferential Attachment Model for Business Firms Growth Rates: I. Empirical Evidence (2006)
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Persistent link: http://EconPapers.repec.org/RePEc:pra:mprapa:15983

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