Access

You are not currently logged in.

Access your personal account or get JSTOR access through your library or other institution:

login

Log in to your personal account or through your institution.

Size Distributions of Firms: A Stochastic Model

Lars Engwall
The Swedish Journal of Economics
Vol. 70, No. 3 (Sep., 1968), pp. 138-159
Published by: Wiley on behalf of The Scandinavian Journal of Economics
DOI: 10.2307/3439308
Stable URL: http://www.jstor.org/stable/3439308
Page Count: 22
  • Subscribe ($19.50)
  • Cite this Item
Size Distributions of Firms: A Stochastic Model
Preview not available

Abstract

Stochastic approaches to the size-distributions of firms are means to explain the resulting distributions in fairly dynamic and growing economies. The first works were presented in the late fifties by Hart & Prais, I. Adelman and Simon & Bonini. This paper discusses the approach of the latter in the light of more recent papers. Simon & Bonini state in their paper that we can expect the upper tail of the steady-state distributions of firms to follow a Pareto-distribution. The parameters of this distribution can be derived from regression analysis. This has been done for the largest firms in the United States, countries outside the United States, Europe, Scandinavia and Sweden. The analysis doesn't give reasons to reject the Pareto-distribution as a description of the size-distributions of the largest firms within the five areas. The validity seems, however, limited to firms of extreme size. The number of these firms doesn't within any of the five area exceed 200. From one of the parameters of the distribution it is possible to derive the ratio between net growth attributable to firms passing a minimi-size and the net growth of all firms. This seems to be largest in the population of firms outside the United States and Europe (40-50%) and smallest in the United States and Sweden (about 30%). The study also shows that this ratio has a close connection with Gini's measure of concentration. Areas with low net contribution from "new" firms also have a high degree of concentration. The study has revealed a need for further work, in order to refine the method and give better possibilities for interpretation of the results. Among methods suitable for the future work are studies of transition-matrices and simulation.

Page Thumbnails

  • Thumbnail: Page 
[138]
    [138]
  • Thumbnail: Page 
139
    139
  • Thumbnail: Page 
140
    140
  • Thumbnail: Page 
141
    141
  • Thumbnail: Page 
142
    142
  • Thumbnail: Page 
143
    143
  • Thumbnail: Page 
144
    144
  • Thumbnail: Page 
145
    145
  • Thumbnail: Page 
146
    146
  • Thumbnail: Page 
147
    147
  • Thumbnail: Page 
148
    148
  • Thumbnail: Page 
149
    149
  • Thumbnail: Page 
150
    150
  • Thumbnail: Page 
151
    151
  • Thumbnail: Page 
152
    152
  • Thumbnail: Page 
153
    153
  • Thumbnail: Page 
154
    154
  • Thumbnail: Page 
155
    155
  • Thumbnail: Page 
156
    156
  • Thumbnail: Page 
157
    157
  • Thumbnail: Page 
158
    158
  • Thumbnail: Page 
159
    159