Book Series
Theories of the Firm
Fifth Edition
Demetri Kantarelis

Appendix I: The evolution of industrial concentration due to luck: an extension

268-276Gibrat's Law of Proportionate Effect is reconsidered by assuming a process of stochastic growth and decline of firms in an industry. With the assistance of computer simulations it is shown that such a process leads to an even more skewed size distribution of firms than a random process of growth only.
1 Introduction
2 Gibrat's Law
3 The Gibrat process with periods of decline
3.1 The effect of a decline
3.2 The effect of fluctuations
4 Examples
4.1 Prais-type experiments
4.2 Scherer-type experiments
5 Conclusions
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