Investigating the Exponential Age Distribution of Firms

31 Pages Posted: 18 Dec 2010

See all articles by Alex Coad

Alex Coad

Max Planck Society for the Advancement of the Sciences - Max Planck Institute for Economics

Multiple version iconThere are 2 versions of this paper

Date Written: 2010

Abstract

While several plots of the aggregate age distribution suggest that firm age is exponentially distributed, we find some departures from the exponential benchmark. At the lower tail, we find that very young establishments are more numerous than expected, but they face high exit hazards. At the upper tail, the oldest firms are older than the exponential would have predicted. Furthermore, the age distribution of disaggregated industries (such as the international airline industry) is less regular and can display multimodality. Although we focused on departures from the exponential, we found that the exponential was a useful reference point and endorse it as an appropriate benchmark for future work on industrial structure. --

Keywords: Age distribution, exponential distribution, firm size distribution, survival

JEL Classification: L20, L25, L11

Suggested Citation

Coad, Alex, Investigating the Exponential Age Distribution of Firms (2010). Economics: The Open-Access, Open-Assessment E-Journal, Vol. 4, 2010-17, Available at SSRN: https://ssrn.com/abstract=1726886 or http://dx.doi.org/10.5018/economics-ejournal.ja.2010-17

Alex Coad (Contact Author)

Max Planck Society for the Advancement of the Sciences - Max Planck Institute for Economics ( email )

Kahlaische Strasse 10
D-07745 Jena, 07745
Germany

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