“ Inference about tail - behavior and measures of inequality ”

There is a famous, or perhaps infamous would be more accurate, book by Zipf (1949) called Human Behavior and the Principle of Least Effort which offers a vast panoply of examples of the applicability of the Pareto law, including examples in linguistics, music and demography. Hill (1974) offers an interpretation in terms of the so-called Bose-Einstein model in which balls are allocated to cells in such a way that, given the current allocation, the probabilities of allocation to the various cells are proportional to the number of balls currently occupying each cell, i.e., growth proportional to current size. This is a model which has received considerable attention in the IO literature on models of firm growth. There is a review of the firm growth