The Firm Size Distribution in a Small Open Economy: Theory and Evidence

We construct a theoretical model of the dynamic processes (firm entry, growth, decline, and exit) that underpin the determination of a limiting firm size distribution (FSD). In particular, we model such dynamic processes using key structural parameters; sunk cost, exogenous entry constraints, and opportunity values of finite duration. The limiting FSD we derive, in steady state, turns out to be a combination of a Logarithmic and Zipf distribution. We estimate these structural parameters using long periods of Irish company data for defined cohorts of firms, in terms of trade orientation, within narrowly defined industries. Within non-exporting and exporting samples of companies our model fits the actual FSD well with a good return to the Zipf distribution in the upper tail, that is less dependent on the estimated structural parameters, and a good return at the lower tail, where the Logarithmic effects are endogenously driven by firm heterogeneity in estimated structural parameters.

The size distribution of all Cambodian establishments

This paper describes the size distribution of all Cambodian establishments for 2009, showing that small- and large-scale establishments accounted for the largest share of employment. We find limited evidence for Zipf's law because Cambodian industry is characterized by a more dense mass of small establishments than the Zipf distribution would predict.Size distribution; establishments; Zipf's law; Cambodia