The persistent and informative distribution of returns on capital




This Letter draws on series of very large national samples to show that cross-sectional distributions of realized returns on capital (RoC) are persistently well described by the same functional form: double stretched-exponentials. The Letter shows how the tails of these distributions can be understood as entropy maxima, suggesting complex patterns of competitive interactions across decentralized, market economies sustain formally persistent statistical equilibria in markets for capital. Such equilibria and their characteristics set the explanatory burden for successful economic accounts of the competitive regulation of profitability. They also point toward interesting new lines of inquiry on the systemic consequences of market competition in those economies and on the price structures it conditions. 


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How to Cite

dos Santos, P. L., & Yang, J. (2019). The persistent and informative distribution of returns on capital. Economics and Business Letters, 8(3), 156–165.