Relative size distribution of business firms—A QRSE approach

Doğuhan Sündal

Economic Modelling, 2024, vol. 140, issue C

Abstract: Several studies have examined specific characteristics of firms while attempting to explain highly skewed firm size distribution and the presence of extreme values. This study adapted the quantal response statistical equilibrium model of boundedly rational firms and used firms’ probabilistic decision-making to infer the equilibrium relative size distribution. The theoretical model complements conventional and entropy-based concentration measures. The study presents an adaptation for business firms in the United States while investigating firms’ expansion decisions, aspired sizes, and responsiveness to opportunities.

Keywords: Quantal response; Maximum entropy; Firm size distribution (search for similar items in EconPapers)
JEL-codes: D21 D22 D40 L11 L25 (search for similar items in EconPapers)
Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecmode:v:140:y:2024:i:c:s0264999324002049

DOI: 10.1016/j.econmod.2024.106847

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