Resource title

A Statistical Equilibrium Model of Competitive Firms

Resource image

image for OpenScout resource :: A Statistical Equilibrium Model of Competitive Firms

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

Resource publisher

Resource publish date

Resource language


Resource content type


Resource resource URL

Resource license

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