The uniqueness of the profits distribution function in the middle scale region

Abstract

We report the proof that the expression of extended Gibrat's law is unique and the probability distribution function (pdf) is also uniquely derived from the law of detailed balance and the extended Gibrat's law. In the proof, two approximations are employed that the pdf of growth rate is described as tent-shaped exponential functions and that the value of the origin of growth rate is constant. These approximations are confirmed in profits data of Japanese companies 2003 and 2004. The resultant profits pdf fits with the empirical data with high accuracy. This guarantees the validity of the approximations.