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| Author: | Cabral, L. |
| Title: | Sunk costs, firm size and firm growth |
| Journal: | Journal of Industrial Economics
1995 : JUN, VOL. 43:2, p. 161-172 |
| Index terms: | INDUSTRIAL ECONOMICS GROWTH COSTS |
| Language: | eng |
| Abstract: | For several decades, the conventional wisdom has been that expected firm growth rates are independent of firm size, a property known as Gibrat's Law. However, recent empirical work has found a negative relation between firm growth and firm size. This paper provides a theoretical explanation for this negative relation in a model of new firm growth where capacity and technology choices involve some degree of sunkness. |
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