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Diversity of firm sizes, complexity, and industry structure in the Chinese economy

Torsten Heinrich () and Shuanping Dai ()

Structural Change and Economic Dynamics, 2016, vol. 37, issue C, 90-106

Abstract: Among the phenomena in economics that are not yet well-understood is the fat-tailed (power-law) distribution of firm sizes in the world's economies. In the present paper we discuss different mechanisms suggested in the literature to explain this distribution of firm sizes. The paper uses the China Industrial Enterprises Database to study the distribution (firm size in terms of the number of employees, capital, and gross profit) for the provinces of China for the years 1998–2008. We estimate the power-law distribution and confirm its plausibility using the KS test and the log-likelihood ratio vs. lognormal and exponential distributions. The analysis on regional levels allows an assessment of regional effects on differences in the distribution; we discuss possible explanations for the observed patterns in the light of the recent regional economic development and the economic reforms in the PRC.

Keywords: Firm size distribution; Evolutionary industry dynamics; Power-law distribution; China (search for similar items in EconPapers)
JEL-codes: B52 C14 C46 L11 N15 (search for similar items in EconPapers)
Date: 2016
References: View references in EconPapers View complete reference list from CitEc
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Working Paper: Diversity of Firm Sizes, Complexity, and Industry Structure in the Chinese Economy (2015) Downloads
Working Paper: Diversity of firm sizes, complexity, and industry structure in the Chinese economy (2015) Downloads
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DOI: 10.1016/j.strueco.2016.01.001

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