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A New Method for Measuring Tail Exponents of Firm Size Distributions

21 Pages Posted: 19 Dec 2011  

Shouji Fujimoto

affiliation not provided to SSRN

Atushi Ishikawa

affiliation not provided to SSRN

Takayuki Mizuno

Hitotsubashi University

Tsutomu Watanabe

Hitotsubashi University - Institute of Economic Research

Multiple version iconThere are 2 versions of this paper

Date Written: 2011

Abstract

The authors propose a new method for estimating the power-law exponents of firm size variables. Their focus is on how to empirically identify a range in which a firm size variable follows a power-law distribution. On the one hand, as is well known a firm size variable follows a power-law distribution only beyond some threshold. On the other hand, in almost all empirical exercises, the right end part of a distribution deviates from a power-law due to finite size effects. The authors modify the method proposed by Malevergne et al. (2011). In this way they can identify both the lower and the upper thresholds and then estimate the power-law exponent using observations only in the range defined by the two thresholds. They apply this new method to various firm size variables, including annual sales, the number of workers, and tangible fixed assets for firms in more than thirty countries.

Keywords: econophysics, power-law distributions, power-law exponents, firm size variables, finite size effect

JEL Classification: C16, C18, D20, E23

Suggested Citation

Fujimoto, Shouji and Ishikawa, Atushi and Mizuno, Takayuki and Watanabe, Tsutomu, A New Method for Measuring Tail Exponents of Firm Size Distributions (2011). Economics: The Open-Access, Open-Assessment E-Journal, Vol. 5, 2011-20. Available at SSRN: https://ssrn.com/abstract=1974390 or http://dx.doi.org/10.5018/economics-ejournal.ja.2011-20

Shouji Fujimoto (Contact Author)

affiliation not provided to SSRN

No Address Available

Atushi Ishikawa

affiliation not provided to SSRN

No Address Available

Takayuki Mizuno

Hitotsubashi University ( email )

2-1 Naka Kunitachi-shi
Tokyo 186-8601
Japan

Tsutomu Watanabe

Hitotsubashi University - Institute of Economic Research ( email )

2-1 Naka Kunitachi-shi
Tokyo 186-8306
Japan

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