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Economics of innovation

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Question:

What is the power law of distribution?

Author: Nasta Charniak



Answer:

In a power-law distribution, the largest entity is typically bigger, more valuable, or more powerful than all others combined. The second-largest is likewise bigger than the total of all those after it, and so on. Also, in a power-law distribution, the top 20% of the entities typically hold 80% of the value or power. The vast majority of returns come from a small percentage of innovative investments.


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