Gibrat’s Law

Gibrat’s Law states that the proportionate growth of a city (or corporation or other social entity) is independent of its size. Here’s an example from Economy Professor:

If a company with sales of $10m doubles in size over a period of time, it is likely the same will happen for a company beginning with sales of only $1m.

This kind of growth can yield stable distributions, such as power laws. An article called Gibrat’s Law for (All) Cities, has more about this law as applied to cities, as might be expected by the title.

2 Responses to “Gibrat’s Law”

  1. kabababrubarta March 26, 2007 at 7:14 pm Permalink

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  2. Phil Manning May 24, 2007 at 12:27 pm Permalink

    I`m looking for data -ammunition actually- so`s to bolster my “start-up business” file. I really don`t want it to go bust before it starts; and I do need well researched arguments with which to slap the crap out of the pessimists.