TY  - JOUR
N2  - The relationship between the size and the variance of firm growth rates is known to follow an approximate power-law behavior ?(S) ? S??(S) where S is the firm size and ?(S) ? 0.2 is an exponent that weakly depends on S. Here, we show how a model of proportional growth, which treats firms as classes composed of various numbers of units of variable size, can explain this size-variance dependence. In general, the model predicts that ?(S) must exhibit a crossover from ?(0) = 0 to ?(?) = 1/2. For a realistic set of parameters, ?(S) is approximately constant and can vary from 0.14 to 0.2 depending on the average number of units in the firm. We test the model with a unique industry-specific database in which firm sales are given in terms of the sum of the sales of all their products. We find that the model is consistent with the empirically observed size-variance relationship. 
EP  - 19600
TI  - The size variance relationship of business firm growth rates
PB  - National Academy of Sciences
SN  - 1091-6490
VL  - 105
A1  - Pammolli, Fabio
A1  - Riccaboni, Massimo
A1  - Buldyrev, Sergey V.
A1  - Ponta, Linda
A1  - Stanley, H. Eugene
N1  - © 2008 by The National Academy of Sciences of the USA
IS  - 50
UR  - http://www.pnas.org/content/105/50/19595.full.pdf+html
Y1  - 2008///
JF  - Proceedings of the National Academy of Sciences
AV  - public
SP  - 19595
KW  -     preferential attachment;
    pharmaceutical industry;
    distributions

ID  - eprints637
ER  -