Info-metrics and Firm Size Distribution
In his "Foundations of info-metrics: Modeling, Inference, and imperfect information," Amos Golan suggests a multi-parameter model for making inferences about firm size distribution. The motivation is providing an example for cases where the available information we have about the system is insufficient for very exact inference. Such problems are widespread in social science, so I believe it is instructive to follow this simple example. Accordingly, we have a country, Uniformia, where the only information we have about the country is they produce a single output with ten different sizes of firms. This is a very typical case since governments rarely make these micro-level data available, concerned with the privacy of their constituents. Golan models the firms with a simple approach: for input X and output Y, the production function for the firm of type A may be y_A = f_A (x_A). So different firms with the same amount of inputs may still differ in their outputs since their prod...