Abstract
In certain situations, the theory cannot be empirically tested due to the lack of mathematical formalism, lack of empirical or even the lack of data models. Moreover an empirical regularity that has lacked a theory to support that is the law of order size. Recently theories in many areas began to support this empirical regularity one being in the field of industrial organization. This study explores this literature and tests the Zipf's Law distribution of the ranking of the largest Brazilian companies for the period 2003-2010 with panel data. The results suggest that the hypothesis of Zipf's Law is only accepted when the number of firms in the sample is small. As the number of firms increases the results indicate that smaller firms grow faster than larger indicating convergence in size of them.
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