An evolutionary model of the size distribution of firms

Fariba Hashemi ()
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Fariba Hashemi: Ecole Polytechnique F, d, rale de Lausanne, 1015 Lausanne, Switzerland

Journal of Evolutionary Economics, 2000, vol. 10, issue 5, 507-521

Abstract: An analytical study of the evolution of the distribution of firm size in an industry is presented. A drift-diffusion model is proposed to express the time-evolution of density of firm size within the industry. The model blends the conventional, more or less static, determinants with the kinds of dynamic considerations introduced by stochastic processes of evolutionary dynamics. The steady-state distribution as well as the dynamic behavior of the model are derived. Parameters in the resulting analytical expressions are then fit to a population of firms in the non-manufacturing service sector. The empirical portion of the paper validates the proposed evolutionary model.

Keywords: Industry; evolution; -; Evolutionary; dynamics; -; Size; distribution; of; firms; -; Diffusion; processes; -; Learning; -; Imitation; -; Incomplete; information; -; Bounded; rationality; -; Survival; analysis (search for similar items in EconPapers)
JEL-codes: L11 (search for similar items in EconPapers)
Date: 2000-10-23
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Citations: View citations in EconPapers (5)

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