Institut für VWL  UnivIS  ERASMUS  QIS  Site Plan 

Institut für Volkswirtschaftslehre  Department of Economics 
Nummer 
200810 

Autoren 
Simone Alfarano, Mishael Milakovic, Albrecht Irle, Jonas Kauschke 

Titel

A Statistical Equilibrium Model of Competitive Firms  
Abstract 
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. Keywords: Statistical equilibrium, maximum entropy principle, diffusion process, stochastic differential equation, competition, profit rate, return on assets, Subbotin distribution, Laplace distribution JEL classification: C16, L10, D21, E10  
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