A Model for Scaling in Firms' Size and Growth Rate Distribution

Cornelia Metzig and Mirta B. Gordon
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Cornelia Metzig: LIG - Laboratoire d'Informatique de Grenoble - UPMF - Université Pierre Mendès France - Grenoble 2 - UJF - Université Joseph Fourier - Grenoble 1 - Grenoble INP - Institut polytechnique de Grenoble - Grenoble Institute of Technology - INPG - Institut National Polytechnique de Grenoble - CNRS - Centre National de la Recherche Scientifique
Mirta B. Gordon: LIG - Laboratoire d'Informatique de Grenoble - UPMF - Université Pierre Mendès France - Grenoble 2 - UJF - Université Joseph Fourier - Grenoble 1 - Grenoble INP - Institut polytechnique de Grenoble - Grenoble Institute of Technology - INPG - Institut National Polytechnique de Grenoble - CNRS - Centre National de la Recherche Scientifique

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Abstract: We introduce a simple agent-based model which allows us to analyze three stylized facts: a fat-tailed size distribution of companies, a 'tent-shaped' growth rate distribution, the scaling relation of the growth rate variance with firm size, and the causality between them. This is achieved under the simple hypothesis that firms compete for a scarce quantity (either aggregate demand or workforce) which is allocated probabilistically. The model allows us to relate size and growth rate distributions. We compare the results of our model to simulations with other scaling relationships, and to similar models and relate it to existing theory. Effects arising from binning data are discussed.

Keywords: agent based model; firms size distribution; growth rate distribution (search for similar items in EconPapers)
Date: 2014
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Citations: View citations in EconPapers (5)

Published in Physica A: Statistical Mechanics and its Applications, 2014, 398, pp.264-279. ⟨10.1016/j.physa.2013.11.027⟩

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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-00909771

DOI: 10.1016/j.physa.2013.11.027

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