Firm Size Dynamics in the Aggregate Economy

Mark Wright () and Esteban Rossi-Hansberg

No 878, 2004 Meeting Papers from Society for Economic Dynamics

Abstract: Why do firm growth and exit rates decline with size? What determines the size distribution of firms and plants? This paper addresses these questions in a dynamic model of firm size with entry and exit that emphasizes the accumulation of specific factors in response to industry specific productivity shocks. The emphasis on the accumulation and allocation of specific factors leads to new implications for the relationship between capital intensity, firm size, and firm dynamics. We show that these implications are consistent with US data.

Keywords: Firm size; Industry equilibrium (search for similar items in EconPapers)
JEL-codes: L2 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-dge, nep-ent, nep-fin and nep-lab
Date: 2004
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Working Paper: Firm Size Dynamics in the Aggregate Economy (2005)
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Persistent link: http://EconPapers.repec.org/RePEc:red:sed004:878

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