On the irreconcilability of Pareto and Gibrat laws |
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| Authors: | Giulio Bottazzi |
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| Affiliation: | Center for the Analysis of Financial and Economic Dynamics, Laboratory of Economics and Management, Scuola Superiore Sant’Anna, P.zza Martiri della Libertà 33, 56127, Pisa, Italy |
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| Abstract: | If business firms face a multiplicative growth process in which their growth rates are Laplace distributed and independent from their sizes, the size cannot be distributed according to a stationary Pareto distribution. Recent contributions, using formal arguments, seem to contrast with these statements. We prove that the proposed formal results are wrong. |
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| Keywords: | Firm growth Gibrat&rsquo s law Power law distribution Laplace distribution |
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