The Exponential Age Distribution and the Pareto Firm Size Distribution

Research output: Contribution to journalArticle

17 Citations (Scopus)

Abstract

Recent work drawing on data for large and small firms has shown a Pareto distribution of firm size. We begin by showing that the firm age distribution is well approximated by an exponential distribution. We then mix a Gibrat-type growth process among incumbents with an exponential distribution of firm's age, to obtain the empirically-observed Pareto distribution.

Original languageEnglish
Pages (from-to)389-395
Number of pages7
JournalJournal of Industry, Competition and Trade
Volume10
Issue number3
DOIs
Publication statusPublished - 2010
Externally publishedYes

Keywords

  • age distribution
  • firm growth
  • firm size distribution
  • Gibrat's law
  • Pareto distribution
  • Zipf Law

ASJC Scopus subject areas

  • Industrial relations

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