Complex Systems

Market Shares Are Not Zipf-Distributed Download PDF

Fernando Buendía
School of Economic and Administrative Sciences
Panamericana University Guadalajara
Prolongación Calzada Circunvalación Poniente 49
Zapopan, Jalisco, Mexico, 45010
fernando.buendia@up.edu.mx

Josué Reynoso
School of Engineering
Panamericana University Guadalajara
Prolongación Calzada Circunvalación Poniente 49
Zapopan, Jalisco, Mexico, 45010
josue.reynoso@up.edu.mx

Abstract

The distribution of market shares within an industry is a relevant performance measure for managers and policy makers, allowing the determination of whether a given industry is competitive or not. Usually, the perfect competition model is the reference to judge the efficiency of markets. However, there are empirical studies that show that one of the most evident features of global firms is that both their size and market are Zipf-distributed. In this paper, it is shown that the distribution of market shares in the world cola-drink market is skewed, but it does not follow Zipf's law; thus it is inadequate to generalize this distribution to any kind of market.