IDEAS home Printed from https://ideas.repec.org/a/spr/empeco/v61y2021i1d10.1007_s00181-020-01851-1.html
   My bibliography  Save this article

Gibrat’s law in the trucking industry

Author

Listed:
  • Andrew T. Balthrop

    (University of Arkansas)

Abstract

The distribution of firm size in the trucking industry is highly skewed, with a few firms accounting for a disproportionate share of transport. The distribution is also highly disperse so that firms have no characteristic size. This paper demonstrates that the distribution of firms sizes can be well approximated by the Zipf distribution. Such a distribution is consistent with a random growth process that is independent of firm size (Gibrat’s law). We use data from the Federal Motor Carrier Safety Administration in 2016 to demonstrate that the Zipf distribution provides a fit that is as good or better than other competing distributions, strongly supporting the model of random growth.

Suggested Citation

  • Andrew T. Balthrop, 2021. "Gibrat’s law in the trucking industry," Empirical Economics, Springer, vol. 61(1), pages 339-354, July.
  • Handle: RePEc:spr:empeco:v:61:y:2021:i:1:d:10.1007_s00181-020-01851-1
    DOI: 10.1007/s00181-020-01851-1
    as

    Download full text from publisher

    File URL: http://link.springer.com/10.1007/s00181-020-01851-1
    File Function: Abstract
    Download Restriction: Access to the full text of the articles in this series is restricted.

    File URL: https://libkey.io/10.1007/s00181-020-01851-1?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Cristiana Donati, 2016. "Firm growth and liquidity constraints: evidence from the manufacturing and service sectors in Italy," Applied Economics, Taylor & Francis Journals, vol. 48(20), pages 1881-1892, April.
    2. Mercedes Teruel-Carrizosa, 2010. "Gibrat’s law and the learning process," Small Business Economics, Springer, vol. 34(4), pages 355-373, May.
    3. Fujiwara, Yoshi & Di Guilmi, Corrado & Aoyama, Hideaki & Gallegati, Mauro & Souma, Wataru, 2004. "Do Pareto–Zipf and Gibrat laws hold true? An analysis with European firms," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 335(1), pages 197-216.
    4. Xavier Gabaix, 2016. "Power Laws in Economics: An Introduction," Journal of Economic Perspectives, American Economic Association, vol. 30(1), pages 185-206, Winter.
    5. Cantor, David E. & Corsi, Thomas M. & Grimm, Curtis M., 2017. "The impact of new entrants and the new entrant program on motor carrier safety performance," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 97(C), pages 217-227.
    6. Benguigui, Lucien & Blumenfeld-Lieberthal, Efrat, 2007. "A dynamic model for city size distribution beyond Zipf's law," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 384(2), pages 613-627.
    7. Enrico Santarelli (ed.), 2006. "Entrepreneurship, Growth, and Innovation," International Studies in Entrepreneurship, Springer, number 978-0-387-32314-5, December.
    8. 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.
    9. Sven-Olov Daunfeldt & Niklas Elert, 2013. "When is Gibrat’s law a law?," Small Business Economics, Springer, vol. 41(1), pages 133-147, June.
    10. Ishikawa, Atushi & Fujimoto, Shouji & Watanabe, Tsutomu & Mizuno, Takayuki, 2013. "The emergence of different tail exponents in the distributions of firm size variables," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 392(9), pages 2104-2113.
    11. Y. Malevergne & V. Pisarenko & D. Sornette, 2005. "Empirical distributions of stock returns: between the stretched exponential and the power law?," Quantitative Finance, Taylor & Francis Journals, vol. 5(4), pages 379-401.
    12. Xavier Gabaix & Rustam Ibragimov, 2011. "Rank - 1 / 2: A Simple Way to Improve the OLS Estimation of Tail Exponents," Journal of Business & Economic Statistics, Taylor & Francis Journals, vol. 29(1), pages 24-39, January.
    13. Giulio Bottazzi & Davide Pirino & Federico Tamagni, 2015. "Zipf law and the firm size distribution: a critical discussion of popular estimators," Journal of Evolutionary Economics, Springer, vol. 25(3), pages 585-610, July.
    14. Hall, Randolph W., 1993. "Design for local area freight networks," Transportation Research Part B: Methodological, Elsevier, vol. 27(2), pages 79-95, April.
    15. Deutsch, J.M., 1994. "Probability distributions for one component equations with multiplicative noise," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 208(3), pages 433-444.
    16. James N. Giordano, 2014. "A Statistical Illusion of Large‐firm Conformity to Gibrat's Law," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 35(4), pages 288-299, June.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Petra Štamfestová & Lukáš Sobíšek & Jiří Hnilica, 2023. "Firm Size Distribution in the Central European Context," Central European Business Review, Prague University of Economics and Business, vol. 2023(5), pages 151-175.
    2. Sherzod B. Akhundjanov & Tatiana Drugova, 2022. "On the growth process of US agricultural land," Empirical Economics, Springer, vol. 63(3), pages 1727-1740, September.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Marko Peric & Vanja Vitezic, 2016. "Impact of global economic crisis on firm growth," Small Business Economics, Springer, vol. 46(1), pages 1-12, January.
    2. Marko Peric & Vanja Vitezic, 2016. "Impact of global economic crisis on firm growth," Small Business Economics, Springer, vol. 46(1), pages 1-12, January.
    3. Junho Na & Jeong-dong Lee & Chulwoo Baek, 2017. "Is the service sector different in size heterogeneity?," Journal of Economic Interaction and Coordination, Springer;Society for Economic Science with Heterogeneous Interacting Agents, vol. 12(1), pages 95-120, April.
    4. Lyócsa, Štefan & Výrost, Tomáš, 2018. "Scale-free distribution of firm-size distribution in emerging economies," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 508(C), pages 501-505.
    5. Stephanie Reitzinger & Astrid Pennerstorfer, 2021. "The size–growth relationship in the social services sector in Austria," Service Business, Springer;Pan-Pacific Business Association, vol. 15(3), pages 445-466, September.
    6. Xavier Gabaix, 2009. "Power Laws in Economics and Finance," Annual Review of Economics, Annual Reviews, vol. 1(1), pages 255-294, May.
    7. Christos Axioglou & Nicos Christodoulakis, 2021. "Which firms survive in a crisis? Investigating Gibrat’s Law in Greece 2001–2014," Economia e Politica Industriale: Journal of Industrial and Business Economics, Springer;Associazione Amici di Economia e Politica Industriale, vol. 48(2), pages 159-217, June.
    8. Ignacio Rosal, 2018. "Power laws in EU country exports," Empirica, Springer;Austrian Institute for Economic Research;Austrian Economic Association, vol. 45(2), pages 311-337, May.
    9. Ji, Guseon & Dai, Bingcun & Park, Sung-Pil & Ahn, Kwangwon, 2020. "The origin of collective phenomena in firm sizes," Chaos, Solitons & Fractals, Elsevier, vol. 136(C).
    10. Petra Štamfestová & Lukáš Sobíšek & Jiří Hnilica, 2023. "Firm Size Distribution in the Central European Context," Central European Business Review, Prague University of Economics and Business, vol. 2023(5), pages 151-175.
    11. Segarra, Agustí & Teruel, Mercedes, 2012. "An appraisal of firm size distribution: Does sample size matter?," Journal of Economic Behavior & Organization, Elsevier, vol. 82(1), pages 314-328.
    12. Chen, Zhimin & Ibragimov, Rustam, 2019. "One country, two systems? The heavy-tailedness of Chinese A- and H- share markets," Emerging Markets Review, Elsevier, vol. 38(C), pages 115-141.
    13. Francesco Quatraro & Marco Vivarelli, 2015. "Drivers of Entrepreneurship and Post-entry Performance of Newborn Firms in Developing Countries," The World Bank Research Observer, World Bank, vol. 30(2), pages 277-305.
    14. Musa, Hussam & Krištofík, Peter & Medzihorský, Juraj & Klieštik, Tomáš, 2024. "The development of firm size distribution – Evidence from four Central European countries," International Review of Economics & Finance, Elsevier, vol. 91(C), pages 98-110.
    15. Wang, Yuanjun & You, Shibing, 2016. "An alternative method for modeling the size distribution of top wealth," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 457(C), pages 443-453.
    16. Arouri, Hassan & Ben-Youssef, Adel & Quatraro, Francesco & Vivarelli, Marco, 2018. "The Determinants of Young Firms Growth in Tunisia," IZA Discussion Papers 11400, Institute of Labor Economics (IZA).
    17. Mickey Folkeringa & Andre Van Stel & Kashifa Suddle & Sita Tan, 2011. "Measuring business dynamics among incumbent firms in The Netherlands," International Journal of Entrepreneurship and Small Business, Inderscience Enterprises Ltd, vol. 12(2), pages 185-206.
    18. John Stachurski, 2019. "Firm Entry and Exit with Unbounded Productivity Growth," Papers 1910.14023, arXiv.org, revised Feb 2024.
    19. Xavier Gabaix & Augustin Landier, 2008. "Why has CEO Pay Increased So Much?," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 123(1), pages 49-100.
    20. Andrew Balthrop, 2016. "Power laws in oil and natural gas production," Empirical Economics, Springer, vol. 51(4), pages 1521-1539, December.

    More about this item

    Keywords

    Gibrat’s law; Transportation; Trucking; Power law; Pareto distribution; Scaling distribution; Fractal;
    All these keywords.

    JEL classification:

    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
    • L91 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Transportation: General
    • R40 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Transportation Economics - - - General
    • C46 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: Special Topics - - - Specific Distributions

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:spr:empeco:v:61:y:2021:i:1:d:10.1007_s00181-020-01851-1. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Sonal Shukla or Springer Nature Abstracting and Indexing (email available below). General contact details of provider: http://www.springer.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.