title: The growth of business firms: theoretical framework and empirical evidence.
abstract: We introduce a model of proportional growth to explain the distribution P(g)(g) of business-firm growth rates. The model predicts that P(g)(g) is exponential in the central part and depicts an asymptotic power-law behavior in the tails with an exponent zeta = 3. Because of data limitations, previous studies in this field have been focusing exclusively on the Laplace shape of the body of the distribution. In this article, we test the model at different levels of aggregation in the economy, from products to firms to countries, and we find that the predictions of the model agree with empirical growth distributions and size-variance relationships.
authors.affiliation: Center for Polymer Studies and Department of Physics, Boston University, Boston, MA 02215, USA. dffu@bu.edu
authors.forename: Dongfeng
authors.initials: D
authors.lastname: Fu
authors.forename: Fabio
authors.initials: F
authors.lastname: Pammolli
authors.forename: S V
authors.initials: SV
authors.lastname: Buldyrev
authors.forename: Massimo
authors.initials: M
authors.lastname: Riccaboni
authors.forename: Kaushik
authors.initials: K
authors.lastname: Matia
authors.forename: Kazuko
authors.initials: K
authors.lastname: Yamasaki
authors.forename: H Eugene
authors.initials: HE
authors.lastname: Stanley
mesh_terms: D003132:Commerce; D004345:Drug Industry / Q000191:economics*; D015233:Models, Statistical; D008962:Models, Theoretical