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The New Palgrave Dictionary of Economics pp 10576–10580Cite as

Palgrave Macmillan

Power Laws

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Abstract

A power law is the form taken by a remarkable number of regularities in economics, and is a relation of the type Y = kXα, where Y and X are variables of interest, α is called the power law exponent, and k is a constant. Many economic laws take the form of power laws, in particular macroeconomic scaling laws, the distribution of income, wealth, size of cities and firms, and the distribution of financial variables such as returns and trading volume. This article surveys the empirical evidence and the theoretical explanations for the occurrence of power laws.

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Authors and Affiliations

  1. http://link.springer.com/referencework/10.1057/978-1-349-95121-5

    Xavier Gabaix

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  1. Xavier Gabaix
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© 2018 Macmillan Publishers Ltd.

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Gabaix, X. (2018). Power Laws. In: The New Palgrave Dictionary of Economics. Palgrave Macmillan, London. https://doi.org/10.1057/978-1-349-95189-5_2342

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