Paper: Superstar Firms through the Generations

Abstract:
We study the landscape of the largets American companies over time. Among the top manufacturing companies today, in the 1950s, and inthe 1910s, birth years always cluster around 1900, but the individual companies have changed. Among the top retailers and wholesalers today and in the past, the age distribution appears stationary. The data suggest that certain settings produce special generations of entrants that give rise to superstar firms for decades to come. We show that the persistent dominance of special cohorts cannot arise in a model with i.i.d. entrant draws. Instead, it can arise from the adoption of a new technology that exhibits higher returns to scale in the presence of learning by doing.