Firm-Size Distribution in Poland: Is Power Law Applicable?

• Main Authors: Piotr Gabrielczak, Tomasz Serwach
• Format: Article
• Language: English
• Published: Collegium of Economic Analysis, SGH Warsaw School of Economics 2021-06-01
• Series: Gospodarka Narodowa. The Polish Journal of Economics
• Subjects: power law; zipf's law; firm-size distribution; scaling
• Online Access: https://gnpje.sgh.waw.pl/Firm-Size-Distribution-in-Poland-Is-Power-Law-Applicable-,134627,0,2.html

This article focuses on the existence of power laws in the firm-size distribution in Poland. Specifically, we empirically test whether the size distribution of companies in Poland has the characteristics of Zipf ’s law, a special case of power law observed in many different contexts in empirical economic literature. Our analysis uses 2019 data on the 2,000 largest companies in Poland as ranked by the Rzeczpospolita daily newspaper in its “Lista 2000” (Top 2,000 List). We reviewed theoretical mechanisms generating power laws and used several estimators of the power-law exponent in our empirical analysis. Our results confirm statistically significant deviations from Zipf ’s law in the firm-size distribution in Poland. We found evidence that the power law cannot satisfactorily approximate the sales-based distribution of firms.