Firm Size

Good article showing that all of the metrics of firm scale are power-law distributed: Zipf Distribution of US Firm Sizes (pdf) by Robert L. Axtel. I betcha that the same shift in exponent found in the wealth distribution has been taking place in the firm size distribution. If true that would shine an interesting light on the ‘small business friendly’ retoric of various parties.

All of Axtel’s work is interesting. He has a agent theory based explaination for why firms scale is that way, along with a simulation. I don’t find the theory all that convincing, but it is a very nice peice of work.

He also has an interesting graph in one of the presentations out on the web that shows that only in Russia are the city sizes not distributed “right”. Presumably that’s telling a strong story about planned economies. It got me wondering if there is a similar story inside firms about the distribution of the size of their various divisions.

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