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A Rank Size Rule In A Firm, Produced From A Hierarchical Branch Office Location Model

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  • Makoto Okumura
  • Makoto Tsukai
  • Naoki Takada

Abstract

Although many studies of the rank‐size rule have examined cities, few have provided a micro‐behavioral foundation for the rule itself. Using a hierarchical branch office location model, this study confirmed that the rank‐size rule appears in the hierarchical structure of a firm calculated using the model. Results show that the power coefficient does not change through a numerical decrease in branch offices when the branch set‐up cost increases. Results also show, however, that the power coefficient becomes larger and that employment becomes more evenly distributed when the effectiveness of branch offices, in terms of the ability to compress and aggregate business information, is enhanced. Progress in information and communications technology (ICT) has enhanced the effectiveness of branch offices. Therefore, a flatter organization of firms can be expected in the future.

Suggested Citation

  • Makoto Okumura & Makoto Tsukai & Naoki Takada, 2010. "A Rank Size Rule In A Firm, Produced From A Hierarchical Branch Office Location Model," Review of Urban & Regional Development Studies, Wiley Blackwell, vol. 22(2‐3), pages 73-88, July.
    • Handle: RePEc:bla:revurb:v:22:y:2010:i:2-3:p:73-88
    DOI: 10.1111/j.1467-940X.2010.00170.x
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    1. Overman, Henry G. & Ioannides, Yannis M., 2001. "Cross-Sectional Evolution of the U.S. City Size Distribution," Journal of Urban Economics, Elsevier, vol. 49(3), pages 543-566, May.
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