4.6 Article

Firm size and economic concentration: An analysis from a lognormal expansion

Journal

PLOS ONE
Volume 16, Issue 7, Pages -

Publisher

PUBLIC LIBRARY SCIENCE
DOI: 10.1371/journal.pone.0254487

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Funding

  1. Consejeria de Educacion of the Junta de Castilla y Leon [SA049G19]
  2. University of Salamanca

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This study examines the distribution of firm size in the Colombian economy, revealing evidence against Gibrat's law and proposing a lognormal expansion model to better fit the distribution, while also showing that firm growth depends heavily on firm characteristics.
This paper studies the distribution of the firm size for the Colombian economy showing evidence against the Gibrat's law, which assumes a stable lognormal distribution. On the contrary, we propose a lognormal expansion that captures deviations from the lognormal distribution with additional terms that allow a better fit at the upper distribution tail, which is overestimated according to the lognormal distribution. As a consequence, concentration indexes should be addressed consistently with the lognormal expansion. Through a dynamic panel data approach, we also show that firm growth is persistent and highly dependent on firm characteristics, including size, age, and leverage -these results neglect Gibrat's law for the Colombian case.

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