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On the mean/variance relationship of the firm size distribution: evidence and some theory

Author

Listed:
  • Edoardo Gaffeo
  • Corrado di Guilmi
  • Mauro Gallegati
  • Alberto Russo

Abstract

In this paper we make use of firm-level data for a sample of European countries to prove the existence of a positive linear relationship between the mean and the variance of firms� size, an empirical regularity known in mathematical biology as the Taylor power law. A computerized experiment is used to show that the estimated slope of the linear relationship can be fruitfully employed to discriminate among alternative theories of firms� growth.

Suggested Citation

  • Edoardo Gaffeo & Corrado di Guilmi & Mauro Gallegati & Alberto Russo, 2008. "On the mean/variance relationship of the firm size distribution: evidence and some theory," Department of Economics Working Papers 0805, Department of Economics, University of Trento, Italia.
    • Handle: RePEc:trn:utwpde:0805
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    Cited by:

    1. Murat ATAN & Emre BOZDAĞ, 2011. "Avrupa Karbonatlı İçecekler Piyasasında Firma Büyüklüğü Ve Büyüklük Genişleme Oranı İlişkisi," Ekonomik Yaklasim, Ekonomik Yaklasim Association, vol. 22(80), pages 19-38.
    2. Elisabetta De Antoni, 2009. "Money and finance: the heterodox views of R. Clower, A. Leijonhufvud and H. Minsky," Department of Economics Working Papers 0908, Department of Economics, University of Trento, Italia.

    More about this item

    Keywords

    Taylor power law; Firm size distribution; Stochastic growth;
    All these keywords.

    JEL classification:

    • L1 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance

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