Physics – Condensed Matter – Statistical Mechanics
Scientific paper
1997-02-10
Physics
Condensed Matter
Statistical Mechanics
19 pages LateX, RevTeX 3, 6 figures, to appear J. Phys. I France (April 1997)
Scientific paper
10.1051/jp1:1997181
In the preceding paper we presented empirical results describing the growth of publicly-traded United States manufacturing firms within the years 1974--1993. Our results suggest that the data can be described by a scaling approach. Here, we propose models that may lead to some insight into these phenomena. First, we study a model in which the growth rate of a company is affected by a tendency to retain an ``optimal'' size. That model leads to an exponential distribution of the logarithm of the growth rate in agreement with the empirical results. Then, we study a hierarchical tree-like model of a company that enables us to relate the two parameters of the model to the exponent $\beta$, which describes the dependence of the standard deviation of the distribution of growth rates on size. We find that $\beta = -\ln \Pi / \ln z$, where $z$ defines the mean branching ratio of the hierarchical tree and $\Pi$ is the probability that the lower levels follow the policy of higher levels in the hierarchy. We also study the distribution of growth rates of this hierarchical model. We find that the distribution is consistent with the exponential form found empirically.
Amaral Luis A. N.
Buldyrev Sergey V.
Havlin Shlomo
Leschhorn Heiko
Maass Philipp
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