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Economics of Industry Paper
The Size Distribution of Businesses, Part I: A Benchmark Case
John Sutton
December 1995
Paper No' EI 09:
Full Paper (pdf)

Tags: market structure; size distribution of firms

This paper examines the evolution of a skew distribution of firm sizes from the viewpoint of the ?Bounds? approach to market structure. It confines attention to the role played by non-strategic factors (statistical independence, and cost side-effects). A model is proposed, which leads to a prediction regarding the least skew size distribution which is likely to be observed. This distribution provides a benchmark relative to which the impact of strategic effects on the form of the size distribution may be assessed.