Resource title

A Statistical Equilibrium Model of Competitive Firms

Resource image

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Resource description

We argue that the complex interactions of competitive heterogeneous firms lead to a statistical equilibrium distribution of firms? profit rates, which turns out to be an exponential power (or Subbotin) distribution. Moreover, we construct a diffusion process that has the Subbotin distribution as its stationary probability density, leading to a phenomenologically inspired interpretation of variations in the shape parameter of the statistical equilibrium distribution. Our main finding is that firms? idiosyncratic efforts and the tendency for competition to equalize profit rates are two sides of the same coin.

Resource author

Albrecht Irle, Mishael Milaković, Simone Alfarano, Jonas Kauschke

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Resource publish date

Resource language

eng

Resource content type

text/html

Resource resource URL

http://hdl.handle.net/10419/22055

Resource license

Adapt according to the presented license agreement and reference the original author.