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On the size distribution of firms: additional evidence from the G7 countries

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  • Gaffeo, Edoardo
  • Gallegati, Mauro
  • Palestrini, Antonio

Abstract

We analyze the average size distribution of a pool of the G7 group's firms over the period 1987–2000. In particular, firm sizes are measured employing different proxies, and after conditioning on business cycle phases. We find that: (i) the empirical distributions are all consistent with a power law; (ii) point estimates suggest that only in limited cases the exponent is equal to −1, i.e., the resulting size distribution generally is not Zipf; (iii) regardless of the variable employed to measure firm sizes, firms are distributed more equally during recessions than during expansions.

Suggested Citation

  • Gaffeo, Edoardo & Gallegati, Mauro & Palestrini, Antonio, 2003. "On the size distribution of firms: additional evidence from the G7 countries," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 324(1), pages 117-123.
    • Handle: RePEc:eee:phsmap:v:324:y:2003:i:1:p:117-123
    DOI: 10.1016/S0378-4371(02)01890-3
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    References listed on IDEAS

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    1. Johannes Voit, 2000. "The growth dynamics of German business firms," Papers cond-mat/0006260, arXiv.org.
    2. Stanley, Michael H. R. & Buldyrev, Sergey V. & Havlin, Shlomo & Mantegna, Rosario N. & Salinger, Michael A. & Eugene Stanley, H., 1995. "Zipf plots and the size distribution of firms," Economics Letters, Elsevier, vol. 49(4), pages 453-457, October.
    3. Thorbjørn Knudsen, 2001. "Zipf's Law for Cities and Beyond: The Case of Denmark," American Journal of Economics and Sociology, Wiley Blackwell, vol. 60(1), pages 123-146, January.
    4. Brock, W A, 1999. "Scaling in Economics: A Reader's Guide," Industrial and Corporate Change, Oxford University Press and the Associazione ICC, vol. 8(3), pages 409-446, September.
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    Keywords

    Firm size; Scaling; Power law;
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