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December 10, 2009 | History

On the mechanics of firm growth 1 edition

On the mechanics of firm growth
Erzo Gerrit Jan Luttmer

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On the mechanics of firm growth
Erzo G.J. Luttmer.

Published 2008 by Federal Reserve Bank of Minneapolis, Research Dept. in [Minneapolis, MN] .
Written in English.

About the Book

Given a common technology for replicating blueprints, high-quality blueprints will be replicated more quickly than low-quality blueprints. If quality begets quality, and firms are identified with collections of blueprints derived from the same initial blueprint, then, along a balanced growth path, Gibrat's Law holds for every type of firm. A firm size distribution with the thick right tail observed in the data can then arise only when the number of blueprints in the economy grows over time, or else firms cannot grow at a positive rate on average. But when calibrated to match the observed firm entry rate and the right tail of the size distribution, this model implies that the median age among firms with more than 10,000 employees is about 750 years. The problem is Gibrat's Law. If the relative quality of a firm's blueprints depreciates as the firm ages, then the firm's growth rate slows down over time. By allowing for rapid and noisy initial growth, this version of the model can explain high observed entry rates, a thick-tailed size distribution, and the relatively young age of large U.S. corporations.

Edition Notes

Title from PDF file (viewed on Oct. 10, 2008).

"February 2008."

Includes bibliographical references.

Also available in print.

System requirements: Adobe Acrobat Reader.

Mode of access: World Wide Web.

Series
Working paper / Federal Reserve Bank of Minneapolis, Research Dept -- 657

Classifications

Library of Congress
HB1

The Physical Object

Format
Electronic resource

ID Numbers

Open Library
OL22649162M
LC Control Number
2008613010

History Created December 10, 2009 · 1 revision Download catalog record: RDF / JSON

December 10, 2009 Created by WorkBot add works page