A Technological and Organisational Explanation for the Size Distribution of Firms

Gans, Joshua S. and Quiggin, John (2000) A Technological and Organisational Explanation for the Size Distribution of Firms.

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Title A Technological and Organisational Explanation for the Size Distribution of Firms
Abstract/Summary This paper combines insights from the literature on the economics of organisation with traditional models of market structure to construct a theory of equilibrium firm size heterogeneity under the assumption of a homogenous product industry. It is possible that configurations consisting entirely of small firms (run by entrepreneurs with limited attention) and with larger firms (using managerial techniques to substitute away these limits to allow increasing returns technologies to become profitable) can arise in equilibrium. However, there also exist equilibrium configurations with the co-existence of large and small firms. The efficiency properties of these respective equilibria are discussed. Finally, the implications of an expanding market size are considered.
Keyword firm size
entrepreneur
increasing returns
strategic groups
bimodal distribution
Date 2000-01-01
Subjects 340205 Industry Economics and Industrial Organisation
Author Gans, Joshua S.
Quiggin, John
Open Access Status Other
Additional Notes Forthcoming article in Journal of Small Business Economics.

Document type: Preprint
Collection: School of Economics Publications
 
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Created: Thu, 05 Feb 2004, 10:00:00 EST