A Dynamic Model of Size Distribution of Firms Applied to U.S. Biotechnology and Trucking Industries

Fariba Hashemi ()
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Fariba Hashemi: Swiss Federal Institute of Technology

Small Business Economics, 2003, vol. 21, issue 1, No 3, 27-36

Abstract: Abstract The present paper attempts to contribute to the existing literature on industry dynamics by proposing a tractable structure for the analysis of the dynamic process governing the size distribution of firms. An analytical model is proposed which describes the density of the cross-sectional distribution of firm size within an industry. The model is based on the theory of diffusion processes, and the method illustrates how information on the time-evolution of size distribution of firms over an extended period of time can be used to make inferences about an underlying process. An empirical application to the evolution of size distribution of population of firms in (i) the U.S. biotechnology industry, and (ii) the U.S. interstate for-hire trucking industry illustrates the applicability of the proposed model in industry studies.

Keywords: Diffusion Process; Dynamic Process; Extended Period; Firm Size; Industrial Organization (search for similar items in EconPapers)
Date: 2003
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DOI: 10.1023/A:1024433203253

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