Defending Gibrat’s Law as a Long-Run Regularity
نویسندگان
چکیده
Defending Gibrat’s Law as a Long-Run Regularity According to Gibrat’s Law of Proportionate Effect, the growth rate of a given firm is independent of its size at the beginning of the period examined. While earlier studies tended to confirm the Law, more recent research generally rejects it. This paper reconciles these two streams of literature, taking into account the role of market selection and learning in reshaping a given population of firms through time. Consistently with previous studies, we found that Gibrat’s Law has to be rejected ex ante, since smaller firms tend to grow faster than their larger counterparts. However, a significant convergence towards Gibrat-like behavior can be detected ex post. This finding is an indication that market selection “cleans” the original population of firms, so that the resulting industrial “core” does not depart from a Gibrat-like pattern of growth. From a theoretical point of view, this result is consistent with those models based on passive and active learning, and can be seen as a defense of the validity of the Law in the long-run. JEL Classification: L11, L26
منابع مشابه
The Settlement of the U.S., 1790 to 2000: The Emergence of Gibrat’s Law
This paper studies the long run spatial development of U.S. counties and metro areas between 1790 and 2000. The often-documented orthogonality between population growth and initial population size — Gibrat’s law — only emerges recently. Between 1790 and 1940 population growth tends to be decreasing with county population, except among the largest counties, for which population growth is slightl...
متن کاملDoes Gibrat’s law hold for Swedish energy firms?
Gibrat’s law predicts that firm growth is purely random and should be independent of firm size. We use a random effects–random coefficient model to test whether Gibrat’s law holds on average in the studied sample as well as at the individual firm level in the Swedish energymarket. No study has yet investigatedwhetherGibrat’s law holds for individual firms, previous studies having instead estima...
متن کاملA Comparative Analysis of Gibrat’s and Zipf’s Law on Urban Population
The regional economics and geography literature on urban population size has in recent years shown interesting conceptual and methodological contributions on the validity of Gibrat’s Law and Zipf’s Law. Despite distinct modeling features, they express similar fundamental characteristics in an equilibrium situation. Zipf’s law is formalized in a static form, while its associated dynamic process ...
متن کاملGibrat’s Law: Are the Services Different?
Several noted surveys on intra-industry dynamics have recently reached the conclusion from a large body of evidence that Gibrat’s Law does not hold. However, almost all of these studies have been based on manufacturing. There are compelling reasons to doubt whether these findings hold for the services. In this paper we examine whether the basic tenet underlying Gibrat’s Law – that growth rates ...
متن کاملNon-Gibrat’s law in the middle scale region
By using numerical simulation, we confirm that Takayasu–Sato–Takayasu (TST) model which leads Pareto’s law satisfies the detailed balance under Gibrat’s law. In the simulation, we take an exponential tent-shaped function as the growth rate distribution. We also numerically confirm the reflection law equivalent to the equation which gives the Pareto index μ in TST model. Moreover, we extend the ...
متن کامل