Gibrat's law: Difference between revisions
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'''Gibrat's law''', sometimes called '''Gibrat's rule of proportionate growth''' is a rule defined by Robert Gibrat [[:fr:Robert Gibrat]] (1904-1980) stating that the size of a firm and its [[growth rate]] are independent. Gibrat's law is also applied to [[City|cities]] size and growth rate as well, where proportionate growth process may give rise to a distribution of city sizes |
'''Gibrat's law''', sometimes called '''Gibrat's rule of proportionate growth''' is a rule defined by Robert Gibrat [[:fr:Robert Gibrat]] (1904-1980) stating that the size of a firm and its [[growth rate]] are independent.<ref name="Gibrat1931">Gibrat R. (1931) ”Les In ́egalit ́es ́economiques”, Paris, France, 1931.</ref>The law proportionate growth gives rise to a distribution that is lognormal.<ref name="Sutton1997">Sutton, J. (1997), ”Gibrat’s Legacy”, Journal of Economic Literature XXXV, 40-59.</ref> Gibrat's law is also applied to [[City|cities]] size and growth rate as well, where proportionate growth process may give rise to a distribution of city sizes that is lognormal, as predicted by Gibrat's law. While the city size distribution is often associated with [[Zipf's law]], this holds only in the upper tail, because empirically the tail of a lognormal distribution cannot be distinguished from Zipf's law. The entire distribution of cities is lognormal <ref name="Eeckhout2004">Eeckhout J. (2004), Gibrat's law for (All) Cities. American Economic Review 94(5), 1429-1451.</ref> |
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In general, processes characterized by Gibrat's law converge to a limiting distribution, which may be [[Log-normal distribution|log-normal]] or [[power law]], depending on more specific assumptions about the [[stochastic]] growth process. |
In general, processes characterized by Gibrat's law converge to a limiting distribution, which may be [[Log-normal distribution|log-normal]] or [[power law]], depending on more specific assumptions about the [[stochastic]] growth process. |
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In the study of the [[business|firms]] (business), the scholars do not agree that the foundation and the outcome of Gibrat's law are empirically correct. |
In the study of the [[business|firms]] (business), the scholars do not agree that the foundation and the outcome of Gibrat's law are empirically correct. |
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== See also == |
== See also == |
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Revision as of 15:51, 17 February 2011
Gibrat's law, sometimes called Gibrat's rule of proportionate growth is a rule defined by Robert Gibrat fr:Robert Gibrat (1904-1980) stating that the size of a firm and its growth rate are independent.[1]The law proportionate growth gives rise to a distribution that is lognormal.[2] Gibrat's law is also applied to cities size and growth rate as well, where proportionate growth process may give rise to a distribution of city sizes that is lognormal, as predicted by Gibrat's law. While the city size distribution is often associated with Zipf's law, this holds only in the upper tail, because empirically the tail of a lognormal distribution cannot be distinguished from Zipf's law. The entire distribution of cities is lognormal [3]
In general, processes characterized by Gibrat's law converge to a limiting distribution, which may be log-normal or power law, depending on more specific assumptions about the stochastic growth process.
In the study of the firms (business), the scholars do not agree that the foundation and the outcome of Gibrat's law are empirically correct.
See also
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