Scandinavian Working Papers in Economics

Working Paper Series,
Research Institute of Industrial Economics

No 452: The Size Distribution of Businesses. Part I: A Benchmark Case

John Sutton
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John Sutton: London School of Economics

Abstract: 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.


JEL-codes: D21; L11; L15

50 pages, March 1996

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