Industry structure factors can be largely classified as technological factor, regulation factor, and stochastic factor. Among those industry structure factors, this study focused on stochastic factor. In those stochastic tradition in explanation of industrial concentration, this study mainly focused on the random growth process known as Gibrat``s law of proportionate effect. Gibrat``s law means that the industry``s smallest company has the same chance of growing, or shrinking, by any percentage rate per period as the industry``s largest company, or any other company in the industry.
In KOSDAQ market, small firms appear to have grown proportionately faster than their larger counterparts during this period. The results suggest that in KOSDAQ market, de-concentration may be taking place. On the other hands, KSE market has no significant relationship between firm size and growth. In the case of this, the Law of Proportionate Effect predicts that if the same non-relationship between size and growth continues in future, these sectors will naturally tend to become more highly concentrated over time, even if the large firms do not enjoy any particular advantages (such as economies of scale or enhanced market power) over the smaller.
Stochastic methodology lacks the generality of asymptotic theory and the results generated are much less robust than those form analytical techniques. It is hoped that extension to mergers and acquisitions and government regulation, which is undoubtedly a factor affecting concentration development in reality, has to be made.