Complex Systems

Random Division and the Size Distribution of Business Firms Download PDF

Fiona C. Maclachlan
Department of Economics and Finance
Manhattan College
Riverdale, NY 10471
fiona.maclachlan@manhattan.edu

Abstract

A computational model of business firm size based on random division is presented. Simulations generate size distributions that are positively skewed with Pareto (power-law) upper tails. Furthermore, the simulated distributions are shown to deviate from the lognormal in ways consistent with some recent empirical findings.