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

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.

Automated summary

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.