Pareto's retail trade turnover distribution

This paper presents modeling of turnover for non-specialized retail trade mainly food, drink and tobacco. We used different methods for modeling: Method of interpolation, Least Squares Method, and Generalized Lotka - Volterra (GLV) model for numerical simulation. We showed that the probability of measuring a particular value of retail trade turnover varies inversely as a power of that turnover. We showed that observed data, and numerical simulation of GLV model reflect power law (Pareto's law) for probability distribution of retail trade turnover, very well. We used data of retail trade turnover and a number of economic entities in Serbia for the year 2010. Thus, we found that retail trade turnover on the Serbian market is distributed according to Pareto distribution with the tail exponent (or parameter alpha) of 3.14, which means that a larger portion of the turnover (income) is owned by a smaller percentage of the big economic entity (0.03%) on this market. This is the first paper that shows the distribution of retail trade turnover possesses properties of Pareto's law on the Serbian market. We proved that each economic entity with a retail trade turnover below 7 million RSD cannot survive on this market. About 28% of the total number of economic entities, are small economic entities, and they have to go out from this market (or go into liquidation). In order to survive in the market, it is necessary to reorganize themselves and connect the clusters of procurement. It would also be necessary that the state institutions and agencies affect the reduction of existing discriminatory prices by regulatory measures.