THE GROWTH OF BUSINESS FIRMS: FACTS AND THEORY | Zendy

Buldyrev Sergey V. | Zendy; Growiec Jakub | Zendy; Pammolli Fabio | Zendy; Riccaboni Massimo | Zendy; Stanley H. Eugene | Zendy

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THE GROWTH OF BUSINESS FIRMS: FACTS AND THEORY

Author(s) -

Buldyrev Sergey V.,

Growiec Jakub,

Pammolli Fabio,

Riccaboni Massimo,

Stanley H. Eugene

Publication year - 2007

Publication title -

journal of the european economic association

Language(s) - English

Resource type - Journals

SCImago Journal Rank - 7.792

H-Index - 93

eISSN - 1542-4774

pISSN - 1542-4766

DOI - 10.1162/jeea.2007.5.2-3.574

Subject(s) - exploit , econometrics , economics , distribution (mathematics) , simple (philosophy) , set (abstract data type) , econometric model , growth model , microeconomics , computer science , mathematics , mathematical analysis , philosophy , computer security , epistemology , programming language

We refer to the framework developed by Ijiri and Simon (1977) and to the notion of independent submarkets (Sutton 1998) to provide a simple candidate explanation for the shape of the firm growth distribution based on a model of proportional growth at the level of both the introduction of new products by firms and their size dynamics. We exploit the features of a unique longitudinal data set which covers the entire distribution of products and firms in the worldwide pharmaceutical industry to test the model at different levels of aggregation as well as at different time lags. Econometric investigations show that the model's predictions are in good agreement with empirical evidence. (JEL: L11, L65)

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