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# The Additive Dilogarithm

## 1. Introduction

In  Déf. (5.1.1), Laumon introduces the category of generalized $`1`$-motives over a field $`k`$ of characteristic $`0`$. Objects in this category are arrows $`f:𝒢G`$ where $`𝒢`$ and $`G`$ are commutative algebraic groups, with $`𝒢`$ assumed formal, torsion free, and $`G`$ assumed connected. These, of course, generalize the more restricted category of $`1`$-motives introduced by Deligne  as a model for the category of mixed Hodge structures of types $`\{(0,0),(0,1),(1,0),(1,1)\}`$. Of particular interest for us are motives of the form $`𝕍`$ which arise in the study of algebraic cycles relative to a “modulus”. Here $`𝕍𝔾_a^n`$ is a vector group. The simplest example is

(1.1)
$$\text{Pic}(𝔸^1,2\{0\})𝔾_a.$$

which may be viewed as a degenerate version of the identification $`\text{Pic}(𝔸^1,\{0,\mathrm{}\})𝔾_m`$ obtained by associating to a unit the corresponding Kummer extension of $``$ by $`(1)`$. (For more details, cf. ,,,,.) We expect such generalized motives to play an important role in the (as yet undefined) contravariant theory of motivic sheaves and motivic cohomology for (possibly singular) varieties.

The polylog mixed motives of Beilinson and Deligne are generalizations to higher weight of Kummer extensions, so it seems natural to look for degenerate, or $`𝔾_a`$ versions of these. The purpose of this article is to begin to study an additive version of the dilogarithm motive. We assume throughout that $`k`$ is a field which for the most part will be taken to be of characteristic $`0`$. Though our results are limited to the dilogarithm, the basic result from cyclic homology

(1.2)
$$Gr_\gamma ^n\mathrm{ker}\left(K_{2n1}(k[t]/(t^2))K_{2n1}(k)\right)k$$

suggests that higher polylogarithms exist as well.

In the first part of the article we introduce an additive “Bloch group” $`TB_2(k)`$ for an algebraically closed field $`k`$ of characteristic $`2`$. In lieu of the $`4`$-term sequence in motivic cohomology associated to the usual Bloch group

(1.3)
$$\begin{array}{c}0H_M^1(\mathrm{Spec}(k),(2))B_2(k)k^\times k^\times \hfill \\ \hfill H_M^2(\mathrm{Spec}(k),(2))0\end{array}$$

(with $`H_M^1(\mathrm{Spec}(k),(2))K_3(k)_{ind}`$ and $`H_M^2(\mathrm{Spec}(k),(2))K_2(k)`$), we find an additive $`4`$-term sequence

(1.4)
$$\begin{array}{c}0TH_M^1(\mathrm{Spec}(k),(2))TB_2(k)kk^\times \hfill \\ \hfill \stackrel{d\mathrm{log}}{}TH_M^2(\mathrm{Spec}(k),(2))0\end{array}$$

where

(1.5)
$$TH_M^1(\mathrm{Spec}(k),(2)):=K_2(𝔸_t^1,(t^2))(t^3)/(t^4)k;$$

$$TH_M^2(\mathrm{Spec}(k),(2)):=K_1(𝔸^1,(t^2))\mathrm{\Omega }_k^1=\text{absolute Kähler }1\text{-forms};$$

$$d\mathrm{log}(ab)=a\frac{db}{b}.$$

Our construction should be compared and contrasted with the results of . Cathelineau’s group $`\beta _2(k)`$ is simply the kernel

(1.6)
$$0\beta _2(k)kk^\times \mathrm{\Omega }_k^10,$$

so there is an exact sequence

(1.7)
$$\begin{array}{ccccccc}0& & TH_M^1(\mathrm{Spec}(k),(2))& & TB_2(k)& & \beta _2(k)0\\ & & & & \\ & & k\end{array}$$

For $`ak`$ we define $`aTB_2(k)`$ lifting similar elements defined by Cathelineau and satisfying his $`4`$-term infinitesimal version

(1.8)
$$ab+ab/a+(1a)(1b)/(1a)=0;a0,1.$$

of the classical $`5`$-term dilogarithm relation. Here, the notation $`xy`$ refers to an action of $`k^\times `$ on $`TB_2(k)`$. Unlike $`\beta _2(k)`$, this action does not extend to a $`k`$-vector space structure on $`TB_2(k)`$. Thus (1.7) is an exact sequence of $`k^\times `$-modules, where the kernel and cokernel have $`k`$-vector space structures but the middle group does not.

Finally in this section we show the assignment $`aa(1a)`$ defines a regulator map $`\rho :TB_2(k)k`$ and the composition

(1.9)
$$TH_M^1(\mathrm{Spec}(k),(2))TB_2(k)\stackrel{\rho }{}k$$

is an isomorphism.

It seems plausible that $`TB_2(k)`$ can be interpreted as a Euclidean sissors-congruence group, with $`:TB_2(k)kk^\times `$ the Dehn invariant and $`\rho :TB_2(k)k`$ the volume. Note the scaling for the $`k^\times `$-action is appropriate, with $`(xy)=x(y)`$ and $`\rho (xy)=x^3\rho (y)`$. For a careful discussion of Euclidean sissors-congruence and its relation with the dual numbers, the reader is referred to  and the references cited there.

In §4 we introduce an extended polylogarithm Lie algebra. The dual co-Lie algebra has generators $`\{x\}_n`$ and $`x_n`$ for $`xk\{0,1\}`$. The dual of the bracket satisfies $`\{x\}_n=\{x\}_{n1}\{1x\}_1`$ and $`x_n=x_{n1}\{1x\}_1+1x_1\{x\}_{n1}`$ with $`x_1=xk`$. For example, $`x_2=xx+(1x)(1x)kk^\times `$ is the Cathelineau relation . It seems likely that there exists a representation of this Lie algebra, extending the polylog representation of the sub Lie algebra generated by the $`\{x\}_n`$, and related to variations of Hodge structure over the dual numbers lifting the polylog Hodge structure.

§5 was inspired by Deligne’s interpretation of symbols  in terms of line bundles with connections. We indicate how this viewpoint is related to the additive dilogarithm. In characteristic $`0`$, one finds affine bundles with connection, and the regulator map on $`K_2`$ linearizes to the evident map $`H^0(X,\mathrm{\Omega }^1)^1(X,𝒪\mathrm{\Omega }^1)`$. In characteristic $`p`$, Artin-Schreier yields an exotic flat realization of the additive dilogarithm motive. For simplicity we limit ourselves to calculations mod $`p`$. The result is a flat covering $`T`$ of $`𝔸^1\{0,1\}`$ which is a torsor under a flat Heisenberg groupscheme $`_{AS}`$. This groupscheme has a natural representation on the abelian groupscheme $`𝕍:=/p\mu _p\mu _p`$. The contraction

(1.10)
$$T\stackrel{_{AS}}{\times }𝕍$$

should, we think, be considered as analogous to the mod $`\mathrm{}`$ étale sheaf on $`𝔸^1\{0,1\}`$ with fibre $`/\mathrm{}\mu _{\mathrm{}}\mu _{\mathrm{}}^2`$ associated to the $`\mathrm{}`$-adic dilogarithm.

The polylogarithms can be interpreted in terms of algebraic cycles on products of copies of $`^1\{1\}`$ (, (3.3)), so it seems natural to consider algebraic cycles on

(1.11)
$$(𝔸^1,2\{0\})\times (^1\{1\},\{0,\mathrm{}\})^n.$$

In the final section of this paper, we calculate the Chow groups of $`0`$-cycles on these spaces. Our result:

(1.12)
$$CH_0\left((𝔸^1,2\{0\})\times (^1\{1\},\{0,\mathrm{}\})^n\right)\mathrm{\Omega }_k^n,n0,$$

is a “degeneration” of the result of Totaro  and Nesterenko-Suslin

(1.13)
$$CH_0\left((^1\{1\},\{0,\mathrm{}\})^n\right)K_n^M(k)=n\text{-th Milnor }K\text{-group,}$$

and a cubical version of the simplicial result $`SH^n(k,n)\mathrm{\Omega }_k^{n1}`$ (see ).

We thank Jörg Wildeshaus and Jean-Guillaume Grebet for helpful remarks.

## 2. Additive Bloch groups

Let $`k`$ be a field with $`1/2k`$. In this section, we mimic the construction in  §5, replacing the semi-local ring of functions on $`^1`$, regular at $`0`$ and $`\mathrm{}`$ by the local ring of functions on $`𝔸^1`$, regular at $`0`$, and the relative condition on $`K`$-theory at $`0`$ and $`\mathrm{}`$ by the one at $`2\{0\}`$. In particular, as we fix only $`0`$ and $`\mathrm{}`$ in this theory, we have a $`k^\times `$-action on the parameter $`t`$ on $`𝔸^1`$ so our groups will be $`k^\times `$-modules.

Thus let $`R`$ be the local ring at $`0`$ on $`𝔸_k^1`$. One has an exact sequence of relative $`K`$-groups

(2.1)
$$K_2(𝔸_k^1)K_2(k[t]/(t^2))K_1(𝔸^1,(t^2))K_1(𝔸^1)K_1(k[t]/(t^2)).$$

Using Van der Kallen’s calculation of $`K_2(k[t]/(t^2))`$  and the homotopy property $`K_{}(k)K_{}(𝔸_k^1)`$, we conclude

(2.2)
$$K_1(𝔸_k^1,(t^2))\mathrm{\Omega }_k^1.$$

Now we localize on $`𝔸^1`$ away from $`0`$. Assuming for simplicity that $`k`$ is algebraically closed, we get

(2.3)
$$\underset{k\{0\}}{}K_2(k)K_2(𝔸^1,(t^2))K_2(R,(t^2))\underset{k\{0\}}{}k^\times \mathrm{\Omega }_k^10$$

To $`a(t^2)`$ and $`bR`$ we associate the pointy-bracket symbol  $`a,bK_2(R,(t^2))`$ which corresponds to the Milnor symbol $`\{1ab,b\}`$ if $`b0`$. These symbols generate $`K_2(R,(t^2))`$. If the divisors of $`a`$ and $`b`$ are disjoint, we get

(2.4)
$$\text{tame}a,b=a|_{\text{poles of }b}+b|_{ab=1}+b^1|_{\text{poles of }a}$$

We continue to assume $`k`$ algebraically closed. Let $`𝒞K_2(R,(t^2))`$ be the subgroup generated by pointy-bracket symbols with $`bk`$. For $`a(t^2)`$ write

(2.5)
$$a(t)=\frac{a_0t^n+\mathrm{}+a_{n2}t^2}{t^m+b_1t^{m1}+\mathrm{}+b_{m1}t+b_m};b_m0.$$

We assume numerator and denominator have no common factors. If $`\alpha _i`$ are the solutions to the equation $`a(t)=\kappa k^\times \mathrm{}`$, then $`\alpha _i^1=b_{m1}/b_m`$. In particular, this is independent of $`\kappa `$. It follows that one has an isomorphism

(2.6)
$$\underset{k\{0\}}{}k^\times /\text{tame}(𝒞)k_{}k^\times ;u|_vv^1u.$$

Define

(2.7)
$$TB_2(k):=K_2(R,(t^2))/𝒞$$

$$TH_M^1(k,2):=\text{image}\left(K_2(𝔸^1,(t^2))TB_2(k)\right)$$

$$TH_M^2(k,2):=\mathrm{\Omega }_k^1=K_1(R,(t^2))$$

A basic result of Goodwillie  yields $`K_2(𝔸^1,(t^2))k`$, so $`TH_M^1(k,2)`$ is a quotient of $`k`$. We will see (remark 2.6) that in fact $`TH_M^1(k,2)k`$. The above discussion yields

###### Proposition 2.1.

Let $`k`$ be an algebraically closed field of characteristic $`2`$. With notations as above, we have an exact sequence

(2.8)
$$0TH_M^1(k,2)TB_2(k)\stackrel{}{}kk^\times \stackrel{\pi }{}\mathrm{\Omega }_k^10.$$

Here $`\pi (ab)=a\frac{db}{b}`$ and $``$ is defined via the tame symbol.

###### Remark 2.2.

There is an evident action of the group $`k^\times `$ on $`𝔸^1`$ (multiplying the parameter) and hence on the sequence (2.8). This action extends to a $`k`$-vector space structure on all the terms except $`TB_2(k)`$.

Let $`𝔪=tRR`$. One has the following purely algebraic description of $`K_2(R,𝔪^2)`$ (, formula (1.4), and the references cited there).
generators:

(2.9)
$$a,b;(a,b)(R\times 𝔪^2)(𝔪^2\times R)$$

Relations:

(2.10)
$$a,b=b,a;a𝔪^2$$

(2.11)
$$a,b+a,c=a,b+cabc;a𝔪^2\text{ or }b,c𝔪^2$$

(2.12)
$$a,bc=ab,c+ac,b;a𝔪^2$$

###### Proposition 2.3.

There is a well-defined and nonzero map

(2.13)
$$\rho :K_2(R,𝔪^2)𝔪^3/𝔪^4$$

defined by

(2.14)
$$\rho a,b:=\{\begin{array}{cc}adb\hfill & a𝔪^2\hfill \\ bda\hfill & b𝔪^2.\hfill \end{array}$$

###### Proof.

Note first if $`a,b𝔪^2`$ then $`adbbda0mod𝔪^4`$ so the definition (2.14) is consistent. For $`a𝔪^2`$

(2.15)
$$a,b+b,aadb+adb=0,$$

so (2.10) holds. For $`a𝔪^2`$

(2.16)
$$a,b+a,cad(b+c)ad(b+cabc)mod𝔪^4$$

for $`b,c𝔪^2`$

(2.17)
$$a,b+a,c(b+c)da(b+cabc)damod𝔪^4$$

For $`a𝔪^2`$,

(2.18)
$$a,bcad(bc)=abdcacdb=\rho (ab,c+ac,b)$$

###### Remark 2.4.

Note that

(2.19)
$$adb\mathrm{log}(1ab)db/b𝔪^2\mathrm{\Omega }_R^1/d\mathrm{log}(1+𝔪^4)𝔪^3/𝔪^4.$$

The group $`𝔪^2\mathrm{\Omega }_R^1/d\mathrm{log}(1+𝔪^4)`$ is the group of isomorphism classes of rank 1 line bundles, trivialized at the order 4 at $`\{0\}`$, with a connection vanishing at the order 2 at $`\{0\}`$. Thus the regulator map $`\rho `$ assigns such a connection to a pointy symbol. Over the field of complex numbers $``$, one can think of it in terms of “Deligne cohomology” $`^2(𝔸^1,j_!(2)t^4𝒪t^2\omega )`$, and one can, as in , write down explicitely an analytic Cech cocycle for this regulator as a Loday symbol.

One has $`\rho t^2,x=t^2dt0`$, thus $`\rho `$ is not trivial. Note also, the appearance of $`𝔪^3`$ is consistent with A. Goncharov’s idea  that the regulator in this context should correspond to the volume of a simplex in hyperbolic $`3`$ space in the sissors-congruence interpretation . In particular, it should scale as the third power of the coordinate.

Proposition 2.3 yields

###### Corollary 2.5.

Let $`𝔪R`$ be the maximal ideal. One has a well-defined map

(2.20)
$$\rho :TB_2(k)𝔪^3/𝔪^4$$

given on pointy-bracket symbols by

(2.21)
$$\rho a,b=adb;a𝔪^2,bR.$$

For $`xTB_2(k)`$ and $`ck^\times `$, write $`cx`$ for the image of $`x`$ under the mapping $`tct`$ on polynomials. Then $`\rho (cx)=c^3\rho (x)`$.

###### Proof.

The first assertion follows because if $`bk`$, then $`db=0`$. The second assertion is clear. ∎

###### Remark 2.6.

The map $`\rho `$ is non-trivial on $`TH_M^1(k,2)`$ because $`\rho t^2,t=t^2dt0`$. Since this group is a $`k^\times `$-module (remark 2.2) and is a quotient of $`k`$ by the result of Goodwillie cited above, it follows that

(2.22)
$$TH_M^1(k,2)(t^3)/(t^4)k$$

## 3. Cathelineau elements and the entropy functional equation

We continue to assume $`k`$ is an algebraically closed field of characteristic $`2`$. Define for $`ak\{0,1\}`$

(3.1)
$$a:=t^2,\frac{a(1a)}{t1}TB_2(k)$$

$$ϵ(a):=aa+(1a)(1a)k^\times k$$

###### Lemma 3.1.

Writing $``$ for the tame symbol as in proposition 2.1, we have $`(a)=2ϵ(a)`$.

###### Proof.

(3.2)
$$\begin{array}{c}(a)=\text{tame}\{\frac{\frac{1t}{a(1a)}+t^2}{\frac{1t}{a(1a)}},\frac{a(1a)}{t1}\}=\hfill \\ \hfill \frac{a(1a)}{t1}|_{t=\frac{1}{a}}+\frac{a(1a)}{t1}|_{t=\frac{1}{1a}}a^2a+(1a)^2(1a)=2ϵ(a)k^\times k.\end{array}$$

###### Lemma 3.2.

We have $`\rho (a)=a(1a)t^2dt(t^3)/(t^4)`$.

###### Proof.

Straightforward from corollary 2.5. ∎

###### Lemma 3.3.

Let notations be as in corollary 2.5, Assume $`k`$ is algebraically closed, and $`\mathrm{char}(k)2,3`$. Then every element in $`TB_2(k)`$ can be written as a sum $`c_ia_i`$. In other words, $`TB_2(k)`$ is generated as a $`k^\times `$-module by the $`a`$.

###### Proof.

Define

(3.3)
$$𝔟:=\text{Image}(:TB_2(k)k^\times k)=\mathrm{ker}(k^\times k\mathrm{\Omega }_k^1).$$

The $`k`$-vectorspace structure $`c(ab)`$ on $`k^\times k`$ is defined by $`acb`$. By (2.6) and (2.4), the map $`TB_2(k)k^\times k`$ is $`k^\times `$-equivariant.

Let $`ATB_2(k)`$ be the subgroup generated by the $`ca`$. $`𝔟`$ is a $`k`$-vector space which is generated  by the $`ϵ(a)`$ so the composition $`ATB_2(k)𝔟`$ is surjective. For $`c_1,c_2k^\times `$ with $`c_1+c_20`$ we have $`(c_1+c_2)ac_1ac_2a0𝔟`$, so this element lies in $`AH_M^1(k,2)`$. It is not trivial because

(3.4)
$$\begin{array}{c}\rho ((c_1+c_2)ac_1ac_2a)=\hfill \\ \hfill \left((c_1+c_2)^3c_1^3c_2^3\right)a(1a)t^2dt=\\ \hfill 3\left(c_1c_2(c_1+c_2)\right)a(1a)t^2dt.\end{array}$$

Since the equation $`\lambda =3\left(c_1c_2(c_1+c_2)\right)a(1a)`$ can be solved in $`k`$, one has $`AH_M^1(k,2)`$. This finishes the proof. ∎

###### Theorem 3.4.

Under the assumptions of lemma 3.3, the group $`TB_2(k)`$ is generated as a $`k^\times `$-module by the $`a`$. These satisfy relations

(3.5)
$$ab+ab/a+(1a)(1b)/(1a)=0.$$

###### Proof.

The generation statement is lemma 3.3. Because we factor out by symbols with one entry constant, we get

(3.6)
$$xa=x^2t^2,\frac{a(1a)}{xt1}=t^2,\frac{x^2a(1a)}{xt1}.$$

The identity to be established then reads

(3.7)
$$\begin{array}{c}0=t^2,\frac{a(1a)}{t1}t^2,\frac{b(1b)}{t1}+t^2,\frac{b(ab)}{at1}+t^2,\frac{(1b)(ba)}{(1a)t1}.\hfill \end{array}$$

The pointy bracket identity $`a,b+a,c=a,b+cabc`$ means we can compute the above sum using “faux” symbols

(3.8)
$$\begin{array}{c}\{t^2,1\frac{a(1a)t^2}{t1}\}\{t^2,1\frac{b(1b)t^2}{t1}\}^1\{t^2,1\frac{b(ab)t^2}{at1}\}\times \hfill \\ \hfill \{t^2,1\frac{(1b)(ba)t^2}{(1a)t1}\}=\{t^2,X\}\end{array}$$

with

(3.9)
$$\begin{array}{c}X=\hfill \\ \hfill \frac{(1t+a(1a)t^2)(1at+b(ab)t^2)(1(1a)t+(1b)(ba)t^2)}{(1t+b(1b)t^2)(1at)(1(1a)t)}\\ \hfill =\frac{(1at)(1(1a)t)(1bt)(1(ab)t)(1(1b)t)(1(ba)t)}{(1bt)(1(1b)t)(1at)(1(1a)t)}\\ \hfill =(1(ab)t)(1(ba)t)=1(ab)^2t^2\end{array}$$

Reverting to pointy brackets, the Cathelineau relation equals

(3.10)
$$\{t^2,X\}=\{1(ab)^2t^2,(ab)^2\}=t^2,(ab)^2=0$$

since we have killed symbols with one entry constant. ∎

###### Remark 3.5.

One can get a presentation for $`TB_2(k)`$ if one imposes (3.5) and in addition relations of the form

(3.11)
$$\left((x+y+z+w)(x+y+z)(x+y+w)\mathrm{}(x)(y)(z)(w)\right)a=0$$

(3.12)
$$(1)a=a.$$

Here $`xk^\times `$ corresponds to $`(x)[k^\times ]`$, and the first relation is imposed whenever it makes sense, i.e. whenever all the partial sums are non-zero. The proof uses uniqueness of solutions for the entropy equation . Details are left for the reader.

###### Remark 3.6.

It is remarkable that a functional equation equivalent to (3.5),

(3.13)
$$a+(1a)\frac{b}{1a}=b+(1b)\frac{a}{1b}$$

occurs in information theory, where it is known to have a unique continuous functional solution (up to scale) given by $`yxyx\mathrm{log}(x)y(1x)\mathrm{log}(1x)`$. If on the other hand, we interpret the torus action $`y`$ as multiplication by $`y^p,p1`$, then the unique solution is $`xx^p+(1x)^p1`$ . Note the regulator map $`\rho (yx)=y^3x(1x)`$, so $`\rho `$ is a solution for $`p=3`$. Indeed, $`x(1x)=\frac{1}{3}(x^3+(1x)^31)`$. (Again, one uses char $`(k)3`$.)

One can check that the functional equation (3.13) is equivalent to (3.5). To see this, one needs the following property of the elements $`a`$.

###### Lemma 3.7.

$`a=aa^1`$.

###### Proof.

We remark again that $`TB_2(k)\stackrel{\rho }{}k𝔟`$ is an isomorphism, so it suffices to check the relations on $`ϵ(a)`$ and on $`\rho (a)=a(1a)t^2dt`$. These become respectively

(3.14)
$$aa+(1a)(1a)=a^11+(1a^1)(1a)k^\times k$$

(3.15)
$$a^3(a^1(1a^1))=a(1a).$$

The second relation is trivial. For the first one, one writes

(3.16)
$$aa+(1a)(1a)=aa+(a)(1a)+(1a^1)(1a)$$

$$=a^1(a+a1)+(1)(1a).$$

Since $`k`$ is 2-divisible, one has $`(1)b=0`$. ∎

## 4. A conjectural Lie algebra of cycles

The purpose of this section is to sketch a conjectural algebraic cycle based theory of additive polylogarithms. The basic reference is , where a candidate for the Tannakian Lie algebra of the category of mixed Tate motives over a field $`k`$ is constructed. The basic tool is a differential graded algebra (DGA) $`𝒩`$ with a supplementary grading (Adams grading)

(4.1)
$$𝒩^{}=_{j0}𝒩(j)^{}$$

$$𝒩(j)^i\text{Codim. }j\text{ algebraic cycles on }(^1\{1\})^{2ji}$$

where $`𝒩(j)^i`$ consists of cycles which meet the faces (defined by setting coordinates $`=0,\mathrm{}`$) properly and which are alternating with respect to the action of the symmetric group on the factors and with respect to inverting the coordinates. The product structure is the external product $`(^1\{1\})^{2j_1i_1}\times (^1\{1\})^{2j_2i_2}=(^1\{1\})^{2j_1i_1+2j_2i_2}`$ followed by alternating projection, and the boundary map is an alternating sum of restrictions to faces. For full details, cf. op. cit.

We consider an enlarged DGA

(4.2)
$$\stackrel{~}{𝒩}^{}=_{j0}\stackrel{~}{𝒩}(j)^{}$$

$$\stackrel{~}{𝒩}(j)^i:=𝒩(j)^iT𝒩(j)^i$$

$$T𝒩(j)^i\text{Codim. }j\text{ algebraic cycles on }𝔸^1\times (^1\{1\})^{2ji1}.$$

The same sort of alternation and good position requirements are imposed for the factors $`^1\{1\}`$. In addition, we impose a “modulus” condition at the point $`0𝔸^1`$. The following definition is tentative, and is motivated by example 4.2 below.

###### Definition 4.1.

Let $`D`$ be the effective divisor $`𝔸^1\times \left((^1)^n𝔾_m^n\right)`$ on $`𝔸^1\times ((^1)^n`$, where $`𝔾_m=^1\{0,\mathrm{}\}`$. Let $`Z𝔸^1\times (^1)^n`$ be an effective algebraic cycle. We assume no component of $`Z`$ lies on $`D`$. Let $`m1`$ be an integer. Let $`F_i:y_i=1`$. We assume no component of $`Z`$ lies in an $`F_i`$. (Components lying in an $`F_i`$ can be ignored when computing motivic cohomology). Write $`F_iZ=r_{W,i}W`$, and define $`r_W=\mathrm{max}_i(r_{W,i})`$. We say that $`Z`$ weakly satisfies the modulus $`m`$ ($`Z0modm\{0\}\times (^1)^n`$) if the intersection $`Z(0)\times (^1)^n=m_VV`$ is defined, and for each $`V`$ with $`m_V0`$ we have

(4.3)
$$mm_V\{\begin{array}{cc}r_V\hfill & VD\hfill \\ r_Vϵ_V\hfill & \text{else}\hfill \end{array}$$

Here $`ϵ_V`$ is the multiplicity with which $`V`$ occurs in $`ZD`$.

We say $`Z`$ satisfies modulus $`m`$ if $`Z^0:=Z|_{𝔸^1\times (^1\{1\})^n}`$ is in good position with respect to all face maps, and if $`Z`$ and the closures of all faces of $`Z^0`$ weakly satisfy modulus $`m`$.

If $`Z`$ satisfies modulus $`m`$ and $`X`$ is any subvariety of $`(^1)^r`$ which is not contained in a face, then $`Z\times X`$ satisfies modulus $`m`$ on $`𝔸^1\times (^1)^{n+r}`$.

###### Example 4.2.

Milnor $`K`$-theory of a field can be interpreted in terms of $`0`$-cycles , . More generally, a Milnor symbol $`\{f_1,\mathrm{},f_p\}`$ over a ring $`R`$ corresponds to the cycle on $`\mathrm{Spec}(R)\times (^1)^p`$ which is just the graph

$$\{(x,f_1(x),\mathrm{}f_p(x))|x\mathrm{Spec}(R)\}$$

One would like cycles with modulus to relate to relative $`K`$-theory. Assume $`R`$ is semilocal, and let $`JR`$ be an ideal. Then we have already used (2.9) that $`K_2(R,J)`$ has a presentation with generators given by pointy-bracket symbols $`a,b`$ with $`aR`$ and $`bJ`$ or vice-versa. The pointy-bracket symbol $`a,b`$ corresponds to the Milnor symbol $`\{1ab,b\}`$ when the latter is defined. Suppose $`R`$ is the local ring on $`𝔸_k^1`$ at the origin, with $`k`$ a field, and take $`J=(s^m)`$, where $`s`$ is the standard parameter. For $`aJ`$ and $`b(s^p)`$ for some $`p0`$, we see that our definition of cycle with modulus is designed so the cycle $`\{(x,1a(x)b(x),b(x))\}`$ has modulus at least $`m`$.

The modulus condition is compatible with pullback to the faces $`t_i=0,\mathrm{}`$.

###### Definition 4.3.

$`T𝒩(j)^i,\mathrm{}i2j1,`$ is the $``$-vectorspace of codimension $`j`$ algebraic cycles on $`𝔸^1\times (^1\{1\})^{2ji1}`$ which are in good position for the face maps $`t_i=0,\mathrm{}`$ and have modulus $`2\{0\}\times (^1)^{2ji1}`$. Here, in order to calculate the modulus, we close up the cycle to a cycle on $`𝔸^1\times (^1)^{2ji1}`$.

Note that a cycle $`Z`$ of modulus $`m1`$ doesn’t meet $`\{0\}\times (^1)^{2ji1}`$ on $`𝔸^1\times (^1\{1\})^{2ji1}`$.

We have a split-exact sequence of $`DGA`$’s,

(4.4)
$$0T𝒩^{}\stackrel{~}{𝒩}^{}\stackrel{}{}𝒩^{}0$$

with multiplication defined so $`T𝒩^{}`$ is a square-zero ideal. Denote the cohomology groups by

(4.5)
$$\stackrel{~}{H}_M^i(k,j):=H^i(\stackrel{~}{𝒩}^{}(j));TH_M^i(k,j):=H^i(T𝒩^{}(j)).$$

As an example, we will see in section 6 that the Chow groups of $`0`$-cycles in this context compute the Kähler differential forms:

(4.6)
$$TH_M^j(k,j)\mathrm{\Omega }_k^{j1};j0.$$

(Here $`\mathrm{\Omega }_k^0=k`$.)

One may apply the bar construction to the DGA $`\stackrel{~}{𝒩}^{}`$ as in . Taking $`H^0`$ yields an augmented Hopf algebra (defining $`TH^0`$ as the augmentation ideal)

(4.7)
$$0TH^0(B(\stackrel{~}{𝒩}^{}))H^0(B(\stackrel{~}{𝒩}^{}))\stackrel{}{}H^0(𝒩^{})0.$$

The hope would be that the corepresentations of the co-Lie algebra of indecomposables (here $`H^{0,+}:=\mathrm{ker}(H^0)`$ denotes the elements of bar degree $`>0`$, cf. op. cit. §2)

(4.8)
$$\stackrel{~}{}:=H^0(B(\stackrel{~}{𝒩}^{}))^+/(H^0(B(\stackrel{~}{𝒩}^{}))^+)^2=T$$

correspond to contravariant motives over $`k[t]/(t^2)`$. In particular, the work of Cathelineau  suggests a possible additive polylogarithm Lie algebra. In the remainder of this section, we will speculate a bit on how this might work.

For a general DGA $`A^{}`$ which is not bounded above, the total grading on the double complex $`B(A^{})`$ has infinitely many summands (cf. , (2.15)). For example the diagonal line corresponding to $`H^0(B(A^{}))`$ has terms ($`A^+:=\mathrm{ker}(A^{}`$))

(4.9)
$$A^1,(A^+A^+)^2,(A^+A^+A^+)^3,\mathrm{}$$

When, however, $`A^{}`$ has a graded structure

(4.10)
$$A^i=_{j0}A^i(j);dA(j)A(j);A^+=_{j>0}A^+(j),$$

for each fixed $`j`$, only finitely many tensors can occur. For example $`H^0(B(\stackrel{~}{𝒩}^{}(1)))=H^1(\stackrel{~}{𝒩}^{}(1))=kk^\times `$, and $`H^0(B(\stackrel{~}{𝒩}^{}(2)))`$ is the cohomology along the indicated degree $`0`$ diagonal in the diagram

(4.11)
$$\begin{array}{cccc}\stackrel{~}{𝒩}^1(1)\stackrel{~}{𝒩}^1(1)& \stackrel{\delta }{}& \stackrel{~}{𝒩}^2(2)& \\ & \mathrm{}deg\mathrm{.\; 0}& & \\ (\stackrel{~}{𝒩}^1(1)\stackrel{~}{𝒩}^0(1))(\stackrel{~}{𝒩}^0(1)\stackrel{~}{𝒩}^1(1))& \stackrel{\delta }{}& \stackrel{~}{𝒩}^1(2)& \\ & & & \\ & & \stackrel{~}{𝒩}^0(2).& \end{array}$$

In the absence of more information about the DGA $`\stackrel{~}{𝒩}^{}`$, it is difficult to be precise about the indecomposable space $`\stackrel{~}{}`$. As an approximation, we have

###### Proposition 4.4.

Let $`db(\stackrel{~}{𝒩})\stackrel{~}{𝒩}^1`$ be the subspace of elements $`x`$ with decomposable boundary, i.e. such that there exists $`y(\stackrel{~}{𝒩}\stackrel{~}{𝒩})^2`$ with $`\delta (y)=(x)\stackrel{~}{𝒩}^2`$. Define

(4.12)
$$q\stackrel{~}{𝒩}:=db(\stackrel{~}{𝒩})/(\stackrel{~}{𝒩}^0+\delta (\stackrel{~}{𝒩}^+\stackrel{~}{𝒩}^+)^1)$$

Then there exists a natural map, compatible with the grading by codimension of cycles (Adams grading)

(4.13)
$$\varphi :\stackrel{~}{}q\stackrel{~}{𝒩}.$$

###### Proof.

Straightforward. ∎

As above, we can decompose

(4.14)
$$q\stackrel{~}{𝒩}=q𝒩Tq𝒩,$$

where $`q𝒩(p)`$ is a subquotient of the space of codimension $`p`$ cycles on $`(^1\{1\})^{2p1}`$, and $`Tq𝒩`$ is a subquotient of the cycles on $`𝔸^1\times (^1\{1\})^{2p2}`$

###### Example 4.5.

The polylogarithm cycle $`\{a\}_p`$ for $`a\{0,1\}`$ is defined to be the image under the alternating projection of $`(1)^{p(p1)/2}`$ times the locus in $`(^1\{1\})^{2p1}`$ parametrized in nonhomogeneous coordinates by

(4.15)
$$(x_1,\mathrm{},x_{p1},1x_1,1x_2/x_1,\mathrm{},1x_{p1}/x_{p2},1a/x_{p1})$$

(We take $`\{a\}_1=1a^1\{1\}`$.) To build a class in $`H^0(B(𝒩^{}))^+`$ and hence in $``$ one uses that $`\{a\}_n=\{a\}_{n1}\{1a\}_1`$.

The following should be compared with , where a similar formula is proposed. The key new point here is that algebraic cycles make it possible to envision this formula in the context of Lie algebras.

###### Conjecture 4.6.

There exist elements $`a_nT(n)`$ (4.8) represented by cycles $`Z_n(a)`$ of codimension $`n`$ on $`𝔸^1\times (^1\{1\})^{2n2}`$ with $`a_1=a𝔸^1\{0\}`$. These cycles should satisfy the boundary condition

(4.16)
$$a_n=a_{n1}\{1a\}_1+1a_1\{a\}_{n1}\left(\stackrel{2}{}\stackrel{~}{}\right)(n).$$

For example, for $`n=2`$,

(4.17)
$$\begin{array}{c}a_2=aa+(1a)(1a)\hfill \\ \hfill kk^\times T(1)(1)\left(\stackrel{2}{}\stackrel{~}{}\right)(2)\end{array}$$

gives Cathelineau’s relation .

###### Proposition 4.7.

Assume given elements $`a_n`$ satisfying (4.16). Let $`\stackrel{~}{𝒫}=_{n=1}^{\mathrm{}}a_n\{a\}_n`$ be the constant graded sheaf over $`𝔸^1\{0,1\}`$. Then $`\stackrel{~}{𝒫},:\stackrel{~}{𝒫}^2\stackrel{~}{𝒫}`$ is a sheaf of co-lie algebras.

###### Proof.

It suffices to show that $`^2=0`$. Using the derivation property of the boundary,

(4.18)
$$\begin{array}{c}a_n=(a_{n1})\{1a\}_11a_1\{a\}_{n1}=\hfill \\ \hfill \left(a_{n2}\{1a\}_1+1a_1\{a\}_{n2}\right)\{1a\}_11a_1\{a\}_{n2}\{1a\}_1=\\ \hfill 0\stackrel{3}{}\stackrel{~}{}.\end{array}$$

We can make the definition (independent of any conjecture)

###### Definition 4.8.

The additive polylogarithm sheaf of Lie algebras over $`𝔸^1\{0,1\}`$ is the graded sheaf of Lie algebras with graded dual the sheaf $`\stackrel{~}{𝒫},:\stackrel{~}{𝒫}^2\stackrel{~}{𝒫}`$ satisfying (4.16) above.

Of course, $`a_2`$ should be closely related to the element $`aK_2(R,(t^2))`$ (3.1). The cycle

(4.19)
$$\{(t,1\frac{t^2a(1a)}{t1},\frac{a(1a)}{t1})|t𝔸^1\}𝔸^1\times (^1\{1\})^2$$

associated to the pointy bracket symbol in (3.1) satisfies the modulus $`2`$ condition but is not in good position with respect to the faces. (It contains $`(1,\mathrm{},\mathrm{})`$.) It is possible to give symbols equivalent to this one whose corresponding cycle is in good position, but we do not have a canonical candidate for such a cycle, or a candidate whose construction would generalize in some obvious way to give all the $`a_n`$.

## 5. The Artin-Schreier dilogarithm

The purpose of this section is to present a definition of what one might call an Artin-Schreier dilogarithm in characteristic $`p`$. To begin with, however, we take $`X`$ to be a complex-analytic manifold and sketch certain analogies between the multiplicative and additive theory. We write $`𝒪`$ (resp. $`𝒪^\times `$, $`\mathrm{\Omega }^1`$) for the sheaf of analytic functions (resp. invertible analytic functions, analytic $`1`$-forms). The reader is urged to compare with .

(5.1)
$$\begin{array}{ccc}\hfill \text{MULTIPLICATIVE}& & \text{ADDITIVE}\hfill \\ \hfill 𝒪^\times \stackrel{𝕃}{}𝒪^\times & & 𝒪𝒪^\times \hfill \\ \hfill 𝒪^\times \stackrel{𝕃}{}𝒪^\times \left(𝒪^\times (1)\mathrm{\Omega }^1\right)[1]& & 𝒪𝒪^\times \left(𝒪(1)\mathrm{\Omega }^1\right)[1]\hfill \\ \hfill K_2& & \mathrm{\Omega }^1\hfill \\ \hfill \text{Steinberg rel’n }=& & \text{Cathelineau rel’n }=\hfill \\ \hfill a(1a)& & aa+(1a)(1a)\hfill \\ \hfill \text{exponential of dilogarithm }=& & \text{Shannon entropy function }=\hfill \\ \hfill \mathrm{exp}\left(_0^a\mathrm{log}(1t)𝑑t/t\right)& & ^a\mathrm{log}(\frac{t}{1t})𝑑t=\hfill \\ & & a\mathrm{log}a+(1a)\mathrm{log}(1a).\hfill \end{array}$$

In the multiplicative (resp. additive) theory, one applies $`𝒪^\times \underset{}{\overset{𝕃}{}}`$ (resp. $`𝒪_{}`$) to the exponential sequence (here $`(1):=2\pi i`$)

(5.2)
$$0(1)𝒪𝒪^\times 0.$$

The regulator maps (5.1), line 2, come from liftings of these tensor products to

(5.3)
$$\begin{array}{ccccc}𝒪^\times (1)& & 𝒪^\times \stackrel{𝕃}{}𝒪& & 𝒪^\times 𝒪^\times \\ & & & & & & \\ 𝒪^\times (1)& & 𝒪^\times 𝒪& & 𝒪^\times 𝒪^\times \\ & & & & & & \\ \mathrm{\Omega }^1& =& \mathrm{\Omega }^1.\end{array}$$

(5.4)
$$\begin{array}{ccccc}𝒪(1)& & 𝒪𝒪& & 𝒪𝒪^\times \\ & & & & \\ \mathrm{\Omega }^1& =& \mathrm{\Omega }^1\end{array}$$

In the multiplicative theory, the regulator map can be viewed as associating to two invertible analytic functions $`f,g`$ on $`X`$ a line bundle with connection $`(f,g)`$ on $`X`$, . The exponential of the dilogarithm

(5.5)
$$\mathrm{exp}(\frac{1}{2\pi i}_0^f\mathrm{log}(1t)\frac{dt}{t})$$

determines a flat section trivializing $`(1g,g)`$. Let $`\{U_i\}`$ be an analytic cover of $`X`$, and let $`\mathrm{log}_if`$ be an analytic branch of the logarithm on $`U_i`$. Then $`(f,g)`$ is represented by the Cech cocycle

(5.6)
$$(g^{\frac{1}{2\pi i}(\mathrm{log}_if\mathrm{log}_jf)},\frac{1}{2\pi i}\mathrm{log}_if\frac{dg}{g})$$

The trivialization comes from the $`0`$-cochain

(5.7)
$$i\mathrm{exp}(\frac{1}{2\pi i}_0^f\mathrm{log}_i(1t)\frac{dt}{t}).$$

The additive theory associates to $`af𝒪𝒪^\times `$ the class in $`^1(X,𝒪(1)\mathrm{\Omega }^1)`$ represented by the cocycle for $`𝒪(1)\mathrm{\Omega }^1`$

(5.8)
$$(a(\mathrm{log}_if\mathrm{log}_jf),\mathrm{log}_ifda).$$

This can be thought of as defining a connection on the affine bundle $`𝒜(a,f)`$ associated to the coboundary of $`af`$ in $`H^1(X,𝒪(1))`$. The affine bundle itself is canonically trivialized because in the diagram

(5.9)
$$\begin{array}{ccccccccc}0& & 𝒪(1)& & 𝒪𝒪& & 𝒪𝒪^\times & & 0\\ & & & & & & \\ & & \mathrm{\Omega }^1& =& \mathrm{\Omega }^1\end{array}$$

the top sequence is split (by multiplication $`𝒪𝒪𝒪(1)`$). The splitting is not compatible with the vertical arrows, so it does not trivialize the connection. More concretely, $`af𝒪𝒪^\times `$ gives the $`1`$-cocycle $`(a(\mathrm{log}_if\mathrm{log}_jf),\mathrm{log}_ifda)^1(X,𝒪(1)\mathrm{\Omega }^1)`$. Subtracting the coboundary of the $`0`$-cochain $`\frac{1}{2\pi i}a\mathrm{log}_if2\pi i`$ leaves the cocycle $`(0,a\frac{df}{f})`$. We have proved:

###### Proposition 5.1.

The map $`:H^0(X,𝒪𝒪^\times )^1(X,𝒪(1)\mathrm{\Omega }^1)`$ factors

$$\begin{array}{ccccc}H^0(X,𝒪𝒪^\times )& \stackrel{afadf/f}{}& H^0(X,\mathrm{\Omega }^1)& & ^1(X,𝒪(1)\mathrm{\Omega }^1).\end{array}$$

In particular, for $`a𝒪`$ such that $`a`$ and $`1a`$ are both units, the Cathelineau elements $`ϵ(a)=aa+(1a)(1a)`$ (3.1) lift to

$$a\mathrm{log}a+(1a)\mathrm{log}(1a)\frac{1}{2\pi i}^a\mathrm{log}(\frac{t}{1t})𝑑t2\pi iH^0(X,𝒪𝒪).$$

###### Remark 5.2.

The element $`aaH^0(X,𝒪𝒪^\times )`$ maps to $`da=0^1(X,𝒪(1)\mathrm{\Omega }^1)`$, but the above construction does not give a canonical trivializing $`0`$\- cocycle.

We now suppose $`X`$ is a smooth variety in characteristic $`p>0`$, and we consider an Artin-Schreier analog of the above construction. In place of the exponential sequence (5.2) we use the Artin-Schreier sequence of étale sheaves

(5.10)
$$\begin{array}{ccccccccc}0& & /p& & 𝔾_a& \stackrel{1F}{}& 𝔾_a& & 0.\end{array}$$

Here $`F`$ is the Frobenius map. We replace the twist by $`𝒪_{\mathrm{an}}^\times `$ over $``$ by the twist over $`/p`$ by $`𝔾_m/𝔾_m^p`$ to build a diagram (compare (5.3). Here $`Z^1\mathrm{\Omega }^1`$ is the subsheaf of closed forms.)

(5.11)
$$\begin{array}{ccccccccc}0& & 𝔾_m/𝔾_m^p& & 𝔾_a𝔾_m/𝔾_m^p& \stackrel{(1F)1}{}& 𝔾_a𝔾_m/𝔾_m^p& & 0\\ & & d\mathrm{log}& & fgf^pdg/g& & \\ & & Z^1& =& Z^1\end{array}$$

The group $`^1(𝔾_mZ^1)`$ is the group of isomorphism classes of line bundles with integrable connections as usual, and $`H^1(`$the subcomplex $`𝔾_m^p0)`$ is the subgroup of connections corresponding to a Frobenius descent. We get an exact sequence

(5.12)
$$\begin{array}{c}0\{\text{line bundle + integrable connection}\}/\{\text{lb + Frobenius descent}\}\hfill \\ \hfill ^1(X,𝔾_m/𝔾_m^pZ^1){}_{p}{}^{}H_{}^{2}(X,𝔾_m).\end{array}$$

###### Proposition 5.3.

Let $`\iota ,C:Z^1\mathrm{\Omega }^1`$ be the natural inclusion and the Cartier operator, respectively. One has a quasi-isomorphism $`(𝔾_m/𝔾_m^pZ^1)\stackrel{\iota C}{}\mathrm{\Omega }^1[1]`$. Then the diagram

$$\begin{array}{ccc}H^0(X,𝔾_a𝔾_m/𝔾_m^p)& \stackrel{(\text{5.11})}{}& ^1(X,𝔾_m/𝔾_m^pZ^1)\\ abadb/b& & \iota C& & \\ H^0(X,\mathrm{\Omega }^1)& =& H^0(X,\mathrm{\Omega }^1)\end{array}$$

is commutative.

###### Proof.

Straightforward from the commutative diagram (with $`𝔟`$ defined to make the columns exact and $`\varphi (ab)=adb/b`$).

(5.13)
$$\begin{array}{ccccccc}& & & & 0& & 0\\ & & & & & & & & \\ & & & & 𝔟& =& 𝔟\\ & & & & & & & & \\ 0& & 𝔾_m/𝔾_m^p& & 𝔾_a𝔾_m/𝔾_m^p& \stackrel{F11}{}& 𝔾_a𝔾_m/𝔾_m^p& & 0\\ & & & & \varphi \left(F1\right)& & \varphi & & \\ 0& & 𝔾_m/𝔾_m^p& & Z^1& \stackrel{1C}{}& \mathrm{\Omega }^1& & 0\\ & & & & & & & & \\ & & & & 0& & 0.\end{array}$$

Next we want to see what plays the role of the exponential of the dilogarithm or the Shannon entropy function in this Artin-Schreier context. Let $`X=\mathrm{Spec}(𝔽_{p^2}[x])`$. Begin with Cathelineau’s element

(5.14)
$$ϵ(x):=xx+(1x)(1x)𝔟.$$

Choose an Artin-Schreier roots $`y^py=x`$ and $`\beta ^p\beta =1`$. To simplify we view $`\beta 𝔽_{p^2}`$ as fixed, and we write $`𝔽=𝔽_{p^2}`$. A local lifting of $`ϵ(x)`$ on the étale cover $`\mathrm{Spec}𝔽(y)\mathrm{Spec}𝔽(x)`$ is given by

(5.15)
$$\rho (y):=yx+(\beta y)(1x)\mathrm{\Gamma }(\mathrm{Spec}𝔽(y),𝔾_a𝔾_m/𝔾_m^p).$$

From diagram (5.13) there should exist a canonical global lifting, i.e. a lifting defined over $`\mathrm{Spec}𝔽(x)`$. This lifting, call it $`\theta (x)`$ has the form $`\theta (x)=\rho (y)\delta (y)^1`$ for some $`\delta (y)\mathrm{\Gamma }(\mathrm{Spec}𝔽(y),𝔾_m/𝔾_m^p)`$. We want to calculate $`\delta (y)`$.

To do this calculation, note

(5.16)
$$\begin{array}{c}\varphi (F1)(\rho (y))=y^pdx/x(\beta y)^pdx/(1x)=\hfill \\ \hfill \frac{(y^p(1y^p+y)+(\beta +1y^p)(y^py))dy}{(y^py)(1y^p+y)}=\\ \hfill \frac{(\beta (y^py)y)dy}{(y^py)(1y^p+y)}=:\eta (y)Z^1.\end{array}$$

Viewed as a meromorphic form on $`_y^1`$, $`\eta `$ has simple poles at the points $`a`$ and $`\beta a`$ for $`a𝔽_p`$. The residue of a form $`P/Qdy`$ at a point $`a`$ where $`Q`$ has a simple zero is given by $`P(a)/Q^{}(a)`$. Using this, the residue of $`\eta `$ at $`a𝔽_p`$ is $`a`$. The residue at $`\beta a`$ is $`\frac{\beta 1(\beta a)}{1}=a`$. Necessarily, therefore, since $`\eta `$ is regular at $`y=\mathrm{}`$ we must have

(5.17)
$$\eta =d\mathrm{log}\left(\underset{a=1}{\overset{p1}{}}\frac{(\beta (y+a))^a}{(y+a)^a}\right)$$

We conclude

(5.18)
$$\delta (y)=\underset{a=1}{\overset{p1}{}}\frac{(\beta (y+a))^a}{(y+a)^a}.$$

Everything is invariant under the automorphism $`y\beta y`$. Indeed, the equation can be rewritten (of course$`mod𝔽(y)^{\times p}`$)

(5.19)
$$\delta (y)=\underset{a=1}{\overset{(p1)/2}{}}\left[\frac{(\beta (y+a))(ya)}{(y+a)(\beta (ya))}\right]^a$$

Note $`\delta (y)`$ depends on $`y`$, not just on $`x`$. Indeed the product (2.6) can be taken for $`0ap1`$, i.e. for $`a𝔽_p`$. One gets then

(5.20)
$$\frac{\delta (y+1)}{\delta (y)}\underset{a=0}{\overset{p1}{}}\frac{y+a}{\beta (y+a)}=\frac{y^py}{1y^py}=\frac{x}{1x}mod𝔽(y)^{\times p}.$$

The fact that $`\rho (y)\delta (y)^1`$ is defined over $`𝔽(x)`$ says that the Cech boundaries of $`\rho (y)`$ and $`\delta (y)`$ coincide. Since the latter is, by definition, the coboundary in $`𝔾_m/𝔾_m^p`$ of $`ϵ(x)=xx+(1x)(1x)`$, it follows that $`\delta (y)`$ is a $`0`$-cochain for the Galois cohomology

$$^{}(𝔽(y)/𝔽(x),𝔾_m/𝔾_m^pZ^1)$$

which trivializes the coboundary of $`\rho (ϵ(x))`$.

Finally, in this section, we discuss a flat realization of the Artin-Schreier dilogarithm. To see the point, consider the $`\mathrm{}`$-adic realization of the usual dilogarithm mixed Tate motivic sheaf over $`𝔸^1\{0,1\}`$. Reducing mod $`\mathrm{}`$ yields a sheaf with fibre an $`𝔽_{\mathrm{}}`$-vector space of dimension $`3`$. The sheaf has a filtration with successive quotients having fibres $`/\mathrm{},\mu _{\mathrm{}},\mu _{\mathrm{}}^2`$. The geometric fundamental group acts on the fibre via a Heisenberg type group. We visualize this action as follows:

(5.21)
$$\left(\begin{array}{ccc}1& \mu _{\mathrm{}}& \mu _{\mathrm{}}^2\\ 0& 1& \mu _{\mathrm{}}\\ 0& 0& 1\end{array}\right)\left(\begin{array}{c}\mu _{\mathrm{}}^2\\ \mu _{\mathrm{}}\\ /\mathrm{}\end{array}\right)$$

Here the notation means that for $`g\pi _1^{geo}`$ the corresponding matrix

$$\left(\begin{array}{ccc}1& a_{12}(g)& a_{13}(g)\\ 0& 1& a_{23}(g)\\ 0& 0& 1\end{array}\right)$$

has $`a_{ij}\text{Hom}(\mu _{\mathrm{}}^{i1},\mu _{\mathrm{}}^{j1})=\mu _{\mathrm{}}^{ji}`$.

The essential ingredients here are first the Heisenberg group $`_{\mathrm{}}`$, second the $`_{\mathrm{}}`$-torsor over $`𝔸^1\{0,1\}`$ corresponding to the kernel of the representation, and third the (standard) representation of $`_{\mathrm{}}`$ on $`/\mathrm{}\mu _{\mathrm{}}\mu _{\mathrm{}}^2`$.

We define an Artin-Schreier Heisenberg group as the non-commutative flat groupscheme $`_{AS}`$ which we could suggestively write

(5.22)
$$_{AS}:=\left(\begin{array}{ccc}1& /p& \mu _p\\ 0& 1& \mu _p\\ 0& 0& 1\end{array}\right).$$

More precisely, $`_{AS}`$ is a central extension

(5.23)
$$0\mu _p_{AS}\mu _p\times /p0.$$

Let

(5.24)
$$b:(\mu _p\times /p)\times (\mu _p\times /p)\mu _p$$

$$b((\zeta _1,a_1),(\zeta _2,a_2))=\zeta _1^{a_2}\zeta _2^{a_1}.$$

Define $`_{AS}=\mu _p\times (\mu _p\times /p)`$ as a scheme, with group structure given by

(5.25)
$$(\zeta _1,\theta _1,a_1)(\zeta _2,\theta _2,a_2):=(\zeta _1\zeta _2\theta _2^{a_1},\theta _1\theta _2,a_1+a_2).$$

The commutator pairing on $`_{AS}`$ is given by

(5.26)
$$\begin{array}{c}[(\zeta _1,\theta _1,a_1),(\zeta _2,\theta _2,a_2)]=(b((\theta _1,a_1),(\theta _2,a_2)),1,0)=\hfill \\ \hfill b((\theta _1,a_1),(\theta _2,a_2))\mu _p.\end{array}$$

We fix a solution $`\beta ^p\beta =1`$. We define a flat $`_{AS}`$-torsor $`T=T_\beta `$ over $`𝔸_{𝔽_{p^2}}^1`$ as follows. A local (for the flat topology) section $`t`$ is determined by
1. A $`p`$-th root of $`\frac{x}{1x}`$: $`w^p\frac{x}{1x}mod𝔽_{p^2}(x)^{\times p}`$.
2. A $`y`$ satisfying $`y^py=x`$.
3. A $`p`$-th root $`z`$ of $`\delta (y):z^p\delta (y)mod𝔽_{p^2}(x)^{\times p}`$ (where $`\delta (y)`$ is as in (5.18).)

The action of $`_{AS}`$ is given by

(5.27)
$$(\zeta ,\theta ,a)(z,w,y)=(\zeta zw^a,\theta w,y+a).$$

Note $`(\zeta zw^a)^p=\delta (y)(\frac{x}{1x})^a=\delta (y+a)`$ by (5.20), so the triple on the right lies in $`T`$. This is an action because

(5.28)
$$\begin{array}{c}(\zeta ^{},\theta ^{},a^{})\left((\zeta ,\theta ,a)(z,w,y)\right)=\hfill \\ \hfill (\zeta ^{},\theta ^{},a^{})\left((\zeta zw^a,\theta w,y+a)\right)=\\ \hfill (\zeta ^{}\zeta zw^a(\theta w)^a^{},\theta ^{}\theta w,y+a+a^{})=(\zeta ^{}\zeta \theta ^a^{},\theta ^{}\theta ,a+a^{})(z,w,y)=\\ \hfill \left((\zeta ^{},\theta ^{},a^{})(\zeta ,\theta ,a)\right)(z,w,y).\end{array}$$

Define $`𝕍:=\mu _p\times \mu _p\times /p`$. There is an evident action of $`_{AS}`$ on $`𝕍`$, viewed as column vectors. We suggest that the contraction $`T\stackrel{_{AS}}{\times }𝕍`$ should be thought of as analogous to the mod $`\mathrm{}`$ étale sheaf on $`𝔸^1\{0,1\}`$ with fibre $`/\mathrm{}\mu _{\mathrm{}}\mu _{\mathrm{}}^2`$ associated to the $`\mathrm{}`$-adic dilogarithm.

## 6. The additive cubical (higher) Chow groups

In this section, we show that the modulus condition we introduced in definition (4.1) yields additive Chow groups which we can compute in weights $`(n,n)`$. We assume throughout that $`k`$ is a field and $`\frac{1}{6}k`$.

One sets

(6.1)
$$A=(𝔸^1,2\{0\})$$

$$B=(^1\{1\},\{0,\mathrm{}\}).$$

The coordinates will be $`x`$ on $`A`$ and $`(y_1,\mathrm{},y_n)`$ on $`B`$. One considers

(6.2)
$$X_n=A\times B^n.$$

The boundary maps $`X_{n1}X_n`$ defined by $`y_i=0,\mathrm{}`$ are denoted by $`_i^j,i=1,\mathrm{},n,j=0,\mathrm{}`$. One denotes by $`Y_nX_n`$ the union of the faces $`_i^j(X_{n1})`$. One defines

(6.3)
$$𝒵_0(X_n)=\xi ,\xi X_nY_n,$$

$$\xi \text{closed point}.$$

For any $`1`$-cycle $`C`$ in $`X_n`$, one denotes by $`\nu :\overline{C}^1\times (^1)^n`$ the normalisation of its compactification. One defines

(6.4)
$$𝒵_1(X_n)=C,CX_n\text{with}$$

$$_i^j(C)𝒵_0(X_{n1})\text{and (cf. definition }\text{4.1}\text{)}$$

$$2\nu ^1(\{0\}\times (^1)^n)+\nu ^1(Y_n)\mathrm{max}_{i=1}^n\nu ^1(^1\times (^1)^{i1}\times \{1\}\times (^1)^{ni})$$

One defines

(6.5)
$$:=\underset{i=1}{\overset{n}{}}(1)^i(_i^0_i^{\mathrm{}}):𝒵_1(X_n)𝒵_0(X_{n1})\text{for  all}i,j.$$

Further one defines the differential form

(6.6)
$$\psi _n=\frac{1}{x}\frac{dy_1}{y_1}\mathrm{}\frac{dy_n}{y_n}\mathrm{\Gamma }(^1\times (^1)^n,\mathrm{\Omega }_{(^1\times (^1)^n)/}^1(\mathrm{log}Y_n)(\{x=0\})).$$

We motivate the choice of this differential form as follows. One considers

(6.7)
$$V_n(t)=(^1\{0,t\},\mathrm{})\times (^1\{0,\mathrm{}\},1)^n.$$

Its cohomology

(6.8)
$$H^{n+1}(V_n(t))=H^1(H^1)^n=F^1(F^1)^n$$

is Hodge-Tate for $`t0`$. The generator is given by

(6.9)
$$\omega _{n+1}(t)=(\frac{dx}{x}\frac{d(xt)}{(xt)})\frac{dy_1}{y_1}\mathrm{}\frac{dy_n}{y_n}.$$

Thus

(6.10)
$$\frac{\omega _{n+1}(t)}{t}|_{t=0}=d(\psi _n).$$

###### Definition 6.1.

We define the additive cubical (higher) Chow groups

$$TH_M^n(k,n)=𝒵_0(X_{n1})/𝒵_1(X_n)$$

One has the following reciprocity law

###### Proposition 6.2.

The map $`𝒵_0(X_{n1})\mathrm{\Omega }_k^{n1}`$ which associates to a closed point $`\xi X_{n1}Y_{n1}`$ the value $`\mathrm{Trace}(\kappa (\xi )/k)(\psi _{n1}(\xi ))`$ factors through

$$TH_M^n(k,n):=𝒵_0(X_{n1})/𝒵_1(X_n).$$

###### Proof.

Let $`C`$ be in $`𝒵_1(X_n)`$. Let $`\mathrm{\Sigma }\overline{C}`$ be the locus of poles of $`\nu ^{}\psi _n`$. One has the functoriality map

(6.11)
$$\nu ^{}:\mathrm{\Omega }_{^1\times (^1)^{n1}}^n(\mathrm{log}Y_{n1})(\{x=0\})\mathrm{\Omega }_{\overline{C}/}^{n1}(\mathrm{\Sigma }).$$

Thus reciprocity says

(6.12)
$$\underset{\sigma \mathrm{\Sigma }}{}\mathrm{res}_\sigma \nu ^{}(\psi _n)=0.$$

Recall that here res means the following. One has a surjection

(6.13)
$$\mathrm{\Omega }_{\overline{C}/}^n(\mathrm{\Sigma })\mathrm{\Omega }_{k/}^{n1}\omega _{\overline{C}/k}(\mathrm{\Sigma })$$

which yields

(6.14)
$$\mathrm{\Gamma }(\overline{C},\mathrm{\Omega }_{\overline{C}/}^n(\mathrm{\Sigma }))\mathrm{\Gamma }(\overline{C},\mathrm{\Omega }_{k/}^{n1}\omega _{\overline{C}/k}(\mathrm{\Sigma }))=\mathrm{\Omega }_{k/}^{n1}\mathrm{\Gamma }(\overline{C},\omega _{\overline{C}/k}(\mathrm{\Sigma })).$$

By definition, res on $`\mathrm{\Omega }_{k/}^{n1}\omega _{\overline{C}/k}(\mathrm{\Sigma })`$ is $`1\mathrm{res}`$. This explains the reciprocity.

Now we analyze $`\mathrm{\Sigma }\sigma ^1(Y_n\{x=0\})`$. Let $`t`$ be a local parameter on $`\overline{C}`$ in a point $`\sigma `$ of $`\nu ^1(\{x=0\})`$.

We write $`x=t^mu`$, where $`u𝒪_{\overline{C},\sigma }^\times ,m0`$. If $`m1`$, the assumption we have on $`𝒵_1`$ says that there is at least one $`i`$ such that $`\{t=0\}`$ lies in $`\nu ^1(\{y_i=1\})`$. Let us order $`i=1,\mathrm{},n`$ such that $`\{t=0\}`$ lies in $`\nu ^1(\{y_i=1\})`$ for $`i=1,2,\mathrm{},r`$. Thus we write

(6.15)
$$y_i1=t^{m_i}u_i,m_1m_2\mathrm{}1,u_i𝒪^\times ,i=1,$$

$$y_i=t^{p_i}u_i,p_i0,u_i𝒪^\times ,i=r+1,\mathrm{},n.$$

The assumption we have says

(6.16)
$$2mm_1.$$

One has around the point $`\sigma `$

(6.17)
$$\nu ^1(\psi _n)|_\sigma =\frac{u^1}{t^m}\frac{d(t^{m_1}u_1)}{1+t^{m_1}u_1}\mathrm{}\frac{d(t^{m_r}u_r)}{1+t^{m_r}u_r}_{i=r+1}^n\frac{d(t^{p_i}u_i)}{t^{p_i}u_i}.$$

We analyze the poles of the right hand side. The numerator of this expression is divisible by $`t^{(m_1+\mathrm{}+m_r)1}`$. Thus the condition for $`\nu ^1\psi _n`$ to be smooth in $`\sigma `$ is

(6.18)
$$m+1(m_1+\mathrm{}+m_r).$$

This is always fulfilled for $`2mm_1`$. We have

(6.19)
$$\nu ^1\psi _n\text{smooth  in }\nu ^1(\{x=0\}).$$

On the other hand, one obviously has

(6.20)
$$\mathrm{res}_{y_i=0}\psi _n=\mathrm{res}_{y_i=\mathrm{}}\psi _n=(1)^i\psi _{n1}.$$

Thus one concludes

(6.21)
$$\underset{\sigma \mathrm{\Sigma }}{}\mathrm{res}_\sigma \nu ^1\psi _n=\underset{i=1}{\overset{n}{}}(1)^i\psi _{n1}(_i^0_i^{\mathrm{}})(C)=0.$$

We want to see that the reciprocity map in proposition 6.2 is an isomorphism. Define

(6.22)
$$k_{}_{i=1}^{n1}k^\times TH_M^n(k,n)$$

$$a(b_1\mathrm{}b_{n1})(\frac{1}{a},b_1,\mathrm{},b_{n1})\text{for}a0$$

$$0\text{for}a=0.$$

###### Proposition 6.3.

Assume $`\frac{1}{6}k`$. Then (6.22) factors through

$$\mathrm{\Omega }_k^{n1}TH_M^n(k,n).$$

###### Proof.

One has the following relations, where $``$ means equivalence modulo $`𝒵_1(X_{n+1})`$:

(6.23)
$$(\frac{1}{x+x^{}},y_1,\mathrm{},y_n)(\frac{1}{x},y_1,\mathrm{},y_n)+(\frac{1}{x^{}},y_1,\mathrm{},y_n)$$

(6.24)
$$(x,y_1z_1,y_2,\mathrm{},y_n)(x,y_1,y_2,\mathrm{},y_n)+(x,z_1,y_2,\mathrm{},y_n)$$

(6.25)
$$(x,1,y_2,\mathrm{},y_n)0TH_M^n(k,n).$$

Note, the last is obviously a consequence of the first two:

(6.26)
$$(2x,1,y_2,\mathrm{},y_n)=2(x,1,y_2,\mathrm{},y_n)=(x,1,y_2,\mathrm{},y_n)=0,$$

so we need only consider (6.23) and (6.24). Assume first $`xx^{}(x+x^{})0`$, and define

(6.27)
$$C=(t,y_1=\frac{(1xt)(1x^{}t)}{1(x+x^{})t},y_2,\mathrm{},y_n)𝒵_1(X_n).$$

Indeed, the expansion of $`y_1`$ in $`t=0`$ reads $`1+t^2c_2+(`$higher order terms$`)`$, so our modulus condition is fulfilled. Also we have taken $`y_ik^\times `$ so $`C`$ meets the faces properly. Then one has

(6.28)
$$(C)=(\frac{1}{x},y_2,\mathrm{},y_n)+(\frac{1}{x^{}},y_2,\mathrm{},y_n)(\frac{1}{x+x^{}},y_2,\mathrm{},y_n).$$

Similarly, if $`x+x^{}=0`$, then one sets

(6.29)
$$C=(t,y_1=(1\frac{t^2}{x^2}),y_i)𝒵_1(X_n).$$

One has

(6.30)
$$(C)=(x,y_i)+(x,y_i),$$

proving (6.23). Note the proposition for $`n=1`$ is a consequence of this identity.

To show multiplicativity in the $`y`$ variables, one uses Totaro’s curve . There is a $`𝒞𝒵_1(B^{n+1})`$ with $`(𝒞)=(y_1z_1,y_2,\mathrm{},y_n)(y_1,y_2,\mathrm{},y_n)(z_1,y_2,\mathrm{},y_n)`$. One sets $`C=(x,𝒞)𝒵_1(X_{n+1})`$. Here $`x`$ is fixed and nonzero, so the modulus condition is automatic, and one has $`(C)=(x,(𝒞))`$. This proves (6.24).

It remains to verify the Cathelineau relation (cf. , )

(6.31)
$$(\frac{1}{a},a,b_2,\mathrm{},b_n)+(\frac{1}{1a},(1a),b_2,\mathrm{},b_n)0.$$

In fact, the $`b_2,\mathrm{}b_nk^\times `$ play no role, so we will drop them. One considers the 1-cycle which is given by its parametrization

(6.32)
$$Z(a)=Z_1(a)+Z_2$$

$$Z_1(a)=(t,1+\frac{t}{2},1\frac{a^2t^2}{4})$$

$$Z_2=(\frac{t}{4},1+\frac{t}{6},1\frac{t^2}{4}),$$

We see immediately that $`Z𝒵_1(X_2)`$. One has

(6.33)
$$(Z_1(a))$$

$$=(2,1a^2)(\frac{2}{a},1+\frac{1}{a})(\frac{2}{a},1\frac{1}{a})=$$

$$(2,1a)+(2,1+a)+(\frac{2}{a},\frac{a1}{a+1})=$$

$$(2,1a)+(\frac{2}{a},a1)+(2,1+a)(\frac{2}{a},a+1)=$$

$$(2,a1)+(\frac{2}{a},a1)+(2,1+a)+(\frac{2}{a},a+1)=$$

$$(\frac{2}{a1},a1)(\frac{2}{a+1},a+1).$$

Setting $`a=12b`$, one obtains

(6.34)
$$(Z_1(a))=(\frac{1}{b},2b)(\frac{1}{1b},2(1b))=$$

$$(\frac{1}{b},b)(\frac{1}{1b},1b)(\frac{1}{b},2)(\frac{1}{1b},2)=$$

$$(\frac{1}{b},b)(\frac{1}{1b},1b)(1,2).$$

One has

(6.35)
$$(Z_2)=(\frac{3}{2},8)(\frac{1}{2},\frac{4}{3})(\frac{1}{2},\frac{2}{3})=$$

$$3(\frac{3}{2},2)(\frac{1}{2},2)=$$

$$(\frac{3}{2},2)+(\frac{3}{4},2)(\frac{1}{2},2)=$$

$$(\frac{1}{2},2)(\frac{1}{2},2)=(1,2).$$

In conclusion

(6.36)
$$(Z(12a))=(\frac{1}{a},a,b_i)+(\frac{1}{1a},1a,b_i).$$

We now have well defined maps $`\varphi _n,\psi _n`$

(6.37)
$$\mathrm{\Omega }_k^{n1}\stackrel{\varphi _n}{}TH_M^n(k,n)\stackrel{\psi _n}{}\mathrm{\Omega }_k^{n1}$$

which split $`TH_M^n(k,n)`$. The image of the differential forms consists of all 0-cycles which are equivalent to 0-cycles $`m_ip_i`$ with $`p_iX_n(k)`$.

###### Theorem 6.4.

. Assume $`\frac{1}{6}k`$. The above maps identify $`TH_M^n(k,n)`$ with $`\mathrm{\Omega }_k^{n1}`$.

###### Proof.

It suffices to show that the class of a give closed point $`p(𝔸^1\{0\})\times (^1\{0,1,\mathrm{}\})^{n1}`$ lies in the image of $`\varphi _n`$. Write $`\kappa =\kappa (p)`$ for the residue field at $`p`$. One first applies a Bertini type argument as in , Proposition 4.5, to reduce to the case where $`\kappa /k`$ is separable. Then we follow the argument in loc.cit. The degree $`[\kappa :k]<\mathrm{}`$, so standard cycle constructions yield a norm map $`N:TH_M^n(\kappa ,n)TH_M^n(k,n)`$. We claim the diagram

(6.38)
$$\begin{array}{ccc}\mathrm{\Omega }_\kappa ^{n1}& \stackrel{\varphi _{n,\kappa }}{}& TH_M^n(\kappa ,n)\\ \mathrm{Tr}& & N& & \\ \mathrm{\Omega }_k^{n1}& \stackrel{\varphi _{n,k}}{}& TH_M^n(k,n)\end{array}$$

is commutative, where $`\mathrm{Tr}`$ is the trace on differential forms. Indeed, $`\mathrm{\Omega }_\kappa ^n=\kappa \mathrm{\Omega }_k^n`$, so it suffices to check on forms $`ad\mathrm{log}(b_1)\mathrm{}d\mathrm{log}(b_{n1})`$ with $`a\kappa `$ and $`b_ik`$. But in this situation, we have projection formulas, both for $`0`$-cycles and for differential forms, and it is straightforward to check (ignore the $`b_i`$ and reduce to $`n=1`$)

(6.39)
$$\mathrm{Tr}(ad\mathrm{log}(b_1)\mathrm{}d\mathrm{log}(b_{n1}))=\mathrm{Tr}_{\kappa /k}(a)d\mathrm{log}(b_1)\mathrm{}d\mathrm{log}(b_{n1})$$

$$N(\frac{1}{a},b_1,\mathrm{},b_{n1})=\{\begin{array}{cc}(\frac{1}{\mathrm{Tr}_{\kappa /k}a},b_1,\mathrm{},b_{n1})\hfill & \mathrm{Tr}(a)0\hfill \\ 0\hfill & \mathrm{Tr}(a)=0\hfill \end{array}$$

Write $`[p]_\kappa `$ (resp. $`[p]_k`$) for the class of $`pTH_M^n(\kappa ,n)`$ (resp. $`TH_M^n(k,n)`$.) One has $`[p]_k=N([p]_\kappa )`$. Since $`p`$ is $`\kappa `$-rational, $`[p]_\kappa \text{Image}(\varphi _\kappa )`$. Commutativity of (6.38) implies $`[p]_k\text{Image}(\varphi _k)`$. It follows that $`\varphi _k`$ is surjective, proving the theorem. ∎


text:
# Statistical models for company growth

## I Introduction

The annual growth rate of a company is fluctuating both across companies and from year to year. It is therefore tempting to study the statistics of this growth rate. It has been known for many years that the average growth rate is to a good approximation independent of the size of the company. This is known as Gibrat’s proportionality law: since the growth rate is the relative size increase of a company (where the size refers to the sales, the number of employees, etc.), the fact that the average growth rate is independent of the size means that on average a company grows proportionally to its size.

A very interesting question, that was only addressed recently, concerns the fluctuations of the growth rate, and the size dependence of these fluctuations. Quite remarkably, Stanley et al. found that the standard deviation $`\sigma `$ of the growth rate $`r`$ decreases with the size $`S`$ of the company as $`\sigma (S)S^\beta `$, with $`\beta 0.18`$ . This power-law scaling holds over six decades, and can be extended to larger sizes by considering countries as ‘companies’ and taking the GNP as a measure of the size . More precisely, the distribution of the rescaled growth rate $`v=r/\sigma (S)`$, with $`\sigma (S)S^\beta `$, appears to be size independent. This rescaled distribution $`\mathrm{\Pi }(v)`$ is furthermore found to be non Gaussian.

This remarkable result is puzzling because one could have naively expected that large companies (or countries for that matter) would aggregate different independent ‘shocks’ that would lead, using the central limit theorem, to a $`S^{1/2}`$ decrease of the volatility of its growth rate, which would furthermore be Gaussian for large $`S`$’s. This however assumes that a company can be thought of as a collection of $`K`$ ‘sub-companies’ of average size $`S_0`$ and weakly correlated activities. In this case, $`K=S/S_0`$ and if the shocks affecting each sector of activity have a finite second moment, the central limit theorem applies.

The fact that $`\beta <1/2`$ suggests otherwise. Obviously, if all the sectors of activity of a given company had strong cross-correlations, one would find the extreme result that $`\beta =0`$. However, this is not the case: Sutton has shown some empirical data that support the idea that the growths of different sectors are to a good approximation uncorrelated . This is what Sutton called the ‘scaling puzzle’, which lead him to propose a simple model for the internal organization of firms that predicts asymptotically $`\beta =1/4`$, not very far from the empirical result .

The aim of this note is threefold. In a first part which we intend to be also of pedagogical interest, we revisit Sutton’s model using methods from statistical physics, and obtain a number of complementary predictions of this model that can be compared with empirical data, in particular the distribution of rescaled growth rate $`\mathrm{\Pi }(v)`$, which we find to be asymptotically Gaussian, at variance with the empirical result. Second, we introduce and study an alternative model where we argue that the distribution of sizes of the sub-sectors is a power-law, and derive analytically the value of $`\beta `$ and the shape of $`\mathrm{\Pi }(v)`$, which in some regime is found to be strongly non-Gaussian. We then compare our results to the findings of Stanley et al. and discuss the plausibility of our alternative model. Finally, we discuss the interesting fact that GNP growth and company growth behave similarly. This means that the microeconomical and macroeconomical levels are strongly interconnected. We show that our model is indeed stable upon aggregation.

## II Sutton’s model

We first recall Sutton’s model. In the absence of more information, Sutton postulates that all partitions of a company of size $`S`$ in smaller sub-pieces are equiprobable . This is a kind of ‘microcanonical’, minimum information assumption, similar to the corresponding hypothesis in statistical physics where all microstates are equiprobable. For physical systems, this is justified by the Liouville theorem that is itself a consequence of Hamiltonian dynamics; it would be interesting to find an analogue of this theorem for the (stochastic) dynamics underlying the organization of firms.

More precisely, Sutton assumes that $`S`$ is a large integer, and uses known mathematical results on the number of partitions to compute $`\sigma (S)`$. Let us show how his results can be recovered directly. For this, we introduce the following quantity:***In the following equation, $`\delta `$ refers to the Dirac delta for continuous variables and to the Kronecker delta for discrete variables.

$$𝒩(R,K,S)=\underset{s_1=1}{\overset{\mathrm{}}{}}\underset{s_2=s_1}{\overset{\mathrm{}}{}}\mathrm{}\underset{s_K=s_{K1}}{\overset{\mathrm{}}{}}\delta \left(S\underset{i=1}{\overset{K}{}}s_i\right)\underset{i=1}{\overset{K}{}}P(\eta _i)\text{d}\eta _i\delta \left(R\underset{i=1}{\overset{K}{}}s_i\eta _i\right).$$
(1)
This quantity counts the number of partitions of the integer $`S`$ in exactly $`K`$ integers $`s_1,s_2,\mathrm{},s_K`$, and such that the total absolute growth rate $`R`$ is given by the sum of independent random variables $`\eta _i`$ (that we suppose of finite variance), each weighted by the size $`s_i`$ of the sub-sector. This assumes a proportionality effect at the sub-sector level. It will be convenient to introduce the Fourier-Laplace transform of this quantity (or generating function), defined as:

$$\widehat{𝒩}(q,\nu ,\lambda )=\underset{S=1}{\overset{\mathrm{}}{}}\underset{K=1}{\overset{\mathrm{}}{}}_{\mathrm{}}^{\mathrm{}}\text{d}R\mathrm{exp}\left[iqR\nu K\lambda S\right]𝒩(R,K,S).$$
(2)
The quantity $`\widehat{𝒩}(q=0,\nu =0,\lambda )`$ is therefore the Laplace transform of the total number of partitions, and is given by:

$$\widehat{𝒩}(q=0,\nu =0,\lambda )=\underset{K=1}{\overset{\mathrm{}}{}}\underset{s_1=1}{\overset{\mathrm{}}{}}\underset{s_2=s_1}{\overset{\mathrm{}}{}}\mathrm{}\underset{s_K=s_{K1}}{\overset{\mathrm{}}{}}\mathrm{exp}\left(\lambda \underset{i=1}{\overset{K}{}}s_i\right),$$
(3)
and be computed explicitly as:

$$\widehat{𝒩}(q=0,\nu =0,\lambda )=\underset{K=1}{\overset{\mathrm{}}{}}\frac{e^{\lambda K}}{_{i=1}^K(1e^{i\lambda K})}.$$
(4)
For $`\lambda 0`$, the sum over $`K`$ can be approximated by an integral:

$$\widehat{𝒩}(q=0,\mu =0,\lambda )_0^{\mathrm{}}\text{d}K\mathrm{exp}\left(\lambda K_0^K\text{d}x\mathrm{ln}(1e^{\lambda x})\right).$$
(5)
Now the integral over $`K`$ can be estimated using a saddle-point method. The saddle point $`K^{}`$ obeys the following equation:

$$\lambda =\mathrm{ln}(1e^{\lambda K^{}}),$$
(6)
which for small $`\lambda `$ gives:

$$K^{}\frac{1}{\lambda }\mathrm{ln}\frac{1}{\lambda }.$$
(7)
Plugging this result in Eq. (5) leads to:

$$\widehat{𝒩}(q=0,\nu =0,\lambda 0)\mathrm{exp}\left(\frac{1}{\lambda }_0^{\mathrm{}}\text{d}v\mathrm{ln}(1e^v)\right)=\mathrm{exp}\left(\frac{\pi ^2}{6\lambda }\right),$$
(8)
where we have neglected preexponential corrections, that can also be computed. Now, it is easy to check that the inverse Laplace transform of $`\widehat{𝒩}(q=0,\nu =0,\lambda 0)`$ behaves, for large $`S`$, as:

$$𝒩(S)\mathrm{exp}[b\sqrt{S}],b=\pi \sqrt{\frac{2}{3}}$$
(9)
which is the Hardy-Ramanujan result at large $`S`$ . In the course of the calculation, one also discovers that, as far as scaling is concerned, $`\lambda S^{1/2}`$. One could extend the computation to get the exact prefactor, equal to $`(4\sqrt{3}S)^1`$.

One can easily extend the computation to $`\nu 0`$. The saddle point is now at:

$$K^{}\frac{1}{\lambda }\mathrm{ln}\frac{1}{\lambda +\nu }.$$
(10)
Now, setting $`\nu =x\lambda /|\mathrm{ln}\lambda |`$, one finds, in the limit $`\lambda 0`$,

$$\frac{\widehat{𝒩}(q=0,x\lambda /|\mathrm{ln}\lambda |,\lambda )}{\widehat{𝒩}(q=0,0,\lambda )}e^x.$$
(11)
Having noted that $`e^x`$ is the Laplace transform of $`\delta (u1)`$, we conclude that when $`S\mathrm{}`$, the variable $`K/\sqrt{S}\mathrm{ln}S`$ tends to unity with probability one. One can also study how the fluctuations behave for large $`S`$. Setting $`K=\sqrt{S}\mathrm{ln}S+y\sqrt{S}`$, one finds that the Laplace transform $`\widehat{P}(z)`$ of the distribution $`P(y)`$ of the random variable $`y`$ reads, for $`S\mathrm{}`$:

$$\widehat{P}(z)=\text{d}ye^{zy}P(y)=\mathrm{exp}\left[z+(1+z)\mathrm{ln}(1+z)\right],$$
(12)
which shows that the distribution of $`y`$ is non Gaussian, even in the limit $`S\mathrm{}`$. For example, the skewness of $`P(y)`$ is found to be equal to $`1`$. In summary, we find that the average number of ‘sub-entities’ is equal to $`\sqrt{S}\mathrm{ln}S`$, with relative (non Gaussian) fluctuations which go to zero as $`1/\mathrm{ln}S`$. The average size of a sub-piece is clearly equal to $`\sqrt{S}/\mathrm{ln}S`$.

Therefore, the most probable partition of a large integer $`S`$ is to break it in $`\sqrt{S}`$ parts of size $`\sqrt{S}`$ (neglecting logarithms) . In fact, as we now show, this is not really correct. A better description is to say that one has $`\sqrt{S}`$ pieces of size $`1`$, $`\sqrt{S}/2`$ pieces of size $`2`$, … and one piece of size $`\sqrt{S}`$. More precisely, what is the average number of occurrences $`N(s|S)`$ of a piece of size $`s`$, given the total size $`S`$? A little reflection tells us that this is given by:

$$N(s|S)𝒩(S)O(s|S)=\underset{k=1}{\overset{\mathrm{}}{}}𝒩(Sks)\underset{k=1}{\overset{\mathrm{}}{}}kQ(Sks),$$
(13)
where $`Q`$ is the probability of occurrence that the number $`s`$ appears exactly $`k`$ times in the partition, defined by the above equation. For $`1sS`$, $`N(s|S)`$ can be approximated by:

$$N(s|S)𝒩(S)\underset{k=1}{\overset{\mathrm{}}{}}\mathrm{exp}(\frac{bks}{2\sqrt{S}})\frac{𝒩(S)}{\mathrm{exp}(\frac{bs}{2\sqrt{S}})1}.$$
(14)
One therefore finds the following interesting result: the size distribution of sub-sectors follows, in Sutton’s model, a Bose-Einstein distribution. This distribution behaves as a power law $`1/s`$, for $`s\sqrt{S}`$ and decays exponentially fast for $`s\sqrt{S}`$. This is a directly testable prediction of Sutton’s model. One can furthermore check directly that:

$$\frac{_{s=1}^SsN(s|S)}{𝒩(S)}\frac{4S}{b^2}_0^{\mathrm{}}\text{d}u\frac{u}{e^u1}=S,$$
(15)
as it should.

As noticed by Sutton, the quantity $`N(s|S)`$ is interesting because it allows us to compute the variance $`\sigma _R^2(S)`$ of the absolute growth rate $`R`$, defined as:

$$\sigma _R^2(S)=\overline{R^2|S},$$
(16)
where the brackets means an average over the random growth rates $`\eta _i`$ and the overline is an average over all partitions of $`S`$. Using the fact that the $`\eta _i`$’s are independent and of variance equal to $`\sigma _0^2`$, one has:

$$\overline{R^2|S}=\sigma _0^2\underset{s}{}s^2\frac{N(s|S)}{𝒩(S)}\sigma _0^2\underset{s}{}\frac{s^2}{\mathrm{exp}(\frac{bs}{2\sqrt{S}})1}=\frac{2^{5/2}3^{3/2}\zeta (3)}{\pi ^3}\sigma _0^2S^{3/2}=1.13955\mathrm{}.\sigma _0^2S^{3/2}.$$
(17)
This is Sutton’s result: the conditional variance of the absolute return grows as $`S^{3/2}`$, therefore the variance of the relative return $`r=R/S`$ decays as $`S^{1/2}`$, which is equivalent to the statement that $`\beta =1/4`$ . In intuitive terms, the total absolute return is the random sum of $`\sqrt{S}`$ different terms, all of order $`\sqrt{S}`$, which gives a random number of order $`\sqrt{S}\sqrt{\sqrt{S}}S^{3/4}`$. This rough (and slightly incorrect) argument actually suggests that the absolute growth rate is the sum of a large number ($`\sqrt{S}`$) of random variables, and therefore should be Gaussian for large $`S`$. We can show this more precisely by computing the kurtosis $`\kappa `$ of $`R`$, defined as:

$$\kappa =\frac{\overline{R^4|S}}{\overline{R^2|S}^2}3.$$
(18)
We assume that the individual growth rates $`\eta `$ have a finite kurtosis given by $`\kappa _0`$. Therefore:

$$\overline{R^4|S}=\sigma _0^4\left[(3+\kappa _0)\overline{\underset{i}{}s_i^4}+3\overline{\underset{ij}{}s_i^2s_j^2}\right]=\sigma _0^4\left[\kappa _0\overline{\underset{i}{}s_i^4}+3\overline{\underset{i,j}{}s_i^2s_j^2}\right].$$
(19)
The first term is easy to compute using $`N(s|S)`$ and one finds:

$$\overline{\underset{i}{}s_i^4}=\underset{s}{}s^4\frac{N(s|S)}{𝒩(S)}\frac{2^{11/2}3^{7/2}}{\pi ^5}\zeta (5)S^{5/2}=7.17114\mathrm{}.S^{5/2}$$
(20)
The second term is more subtle since one needs to know the correlation of the number of occurrences of two integers $`s,s^{}`$ involved in the partition of $`S`$, $`O(s|S)O(s^{}|S)`$. This quantity can be obtained similarly to $`N(s|S)`$. For $`s=s^{}`$, one has:

$$𝒩(S)O(s|S)^2\underset{k=1}{\overset{\mathrm{}}{}}k^2Q(Sks)=\underset{k=1}{\overset{\mathrm{}}{}}(2k1)𝒩(Sks).$$
(21)
which can be again be approximated as

$$O(s|S)^2\underset{k=1}{\overset{\mathrm{}}{}}(2k1)\mathrm{exp}\left(\frac{bks}{2\sqrt{S}}\right)=\frac{\mathrm{exp}(\frac{bs}{2\sqrt{S}})+1}{\left(\mathrm{exp}(\frac{bs}{2\sqrt{S}})1\right)^2}$$
(22)
Therefore:

$$\underset{s=1}{\overset{S}{}}s^4\left[O(s|S)^2O(s|S)^2\right]\left(\frac{2\sqrt{S}}{b}\right)^5_0^{\mathrm{}}\text{d}uu^4\frac{e^u}{(e^u1)^2}=\frac{2^{9/2}3^{3/2}}{5\pi }S^{5/2}=7.48509\mathrm{}.S^{5/2}.$$
(23)
The terms with $`ss^{}`$ can be computed from:

$$O(s|S)O(s^{}|S)\underset{k=1,\mathrm{}}{\overset{\mathrm{}}{}}\mathrm{exp}\left(\frac{bks}{2\sqrt{S}}\frac{b\mathrm{}s^{}}{2\sqrt{S}}\frac{b}{8S^{3/2}}(ks+\mathrm{}s^{})^2+\mathrm{}\right).$$
(24)
The reason we took one extra term in the above expansion is that $`O(s|S)O(s^{}|S)O(s|S)O(s^{}|S)`$ is zero to first order. The non zero correlation comes from the term $`k\mathrm{}ss^{}`$ in the above expression. To lowest order, one finally finds,

$$\underset{ss^{}=1}{\overset{S}{}}s^2s^2\left[O(s|S)O(s^{}|S)O(s|S)O(s^{}|S)\right]\frac{2^{19/2}3^{5/2}}{\pi ^5}[\zeta (3)]^2S^{3/2}=53.2953\mathrm{}S^{3/2}.$$
(25)
This contribution is a factor $`S`$ smaller than the other two contributions, but has a rather large prefactor. To leading order in $`S`$, the final result reads:

$$\kappa \frac{1}{\sqrt{S}}\left[5.52232\mathrm{}\kappa _0+5.76408\mathrm{}\right]$$
(26)
The conclusion is that if the growth rates of the sub-sectors are non Gaussian, the kurtosis of the aggregate growth rate decreases as $`1/\sqrt{S}`$ for large $`S`$. This is expected on general grounds, since we have seen above that the number of independent sub-entities is of order $`\sqrt{S}`$, and the kurtosis of a sum decreases as the inverse of the number of independent terms in a sum. The second contribution comes from the fluctuations of the numbers of terms in the sum.

Therefore, asymptotically, the rescaled aggregate growth rate $`rS^{1/4}`$ is found to be Gaussian in Sutton’s model, at variance with empirical findings. However, for finite $`S`$, there are important corrections to this asymptotic result: suppose that the initial kurtosis of $`\eta `$ is equal to $`3`$, which is the case when $`\eta `$ is distributed according to a symmetric exponential. Take a reasonable value $`S=100`$. Then the residual kurtosis of the growth rate is still quite large, $`2.2`$. Hence, significant deviations from a Gaussian distribution may be observed in reality, but should diminish as $`S`$ becomes large. We shall come back to this issue in section IV.

## III An alternative model

### A Definition of the model

We now discuss another model, where we assume that companies are formed by aggregating entities that have a certain a priori distribution of sizes, that we choose to be a power-law. The motivation for this is two-fold. First, the distribution of company sizes in a country is known to be a Pareto (power-law) distribution. Since the scaling law for the variance of the growth rate also seems to hold at the country level, one could indeed argue that the actual distribution of company sizes should play a role. Second, there is a quite general and plausible dynamical model that leads to a power-law distribution of sizes. Assume, as in Sutton’s model, that each sub-entity in a company has a random growth rate. The role of the business management is, to a certain extent, to redistribute the income of each sector of activity such as to help the less performing ones to catch up. Therefore, a reasonable dynamical model for the size $`s_i(t)`$ of a given sub-entity is:

$$\frac{\text{d}s_i}{\text{d}t}=\gamma \left(\frac{1}{K}\underset{j=1}{\overset{K}{}}s_j(t)s_i(t)\right)+\eta _i(t)s_i(t),$$
(27)
where the first two terms describe redistribution of resources among the sub-entities, and the last term the random growth rate. The parameter $`\gamma `$ measures the strength of the redistribution policy. It can be shown that the stationary distribution for such a stochastic process has a power law tail, $`p(s)s^{1\mu }`$, with $`\mu =1+\gamma /\sigma _0^2`$. (See the detailed discussion and generalization in , and also  for alternative models.)

Hence, we assume that the a priori distribution of the size of sub-entities has a power law tail:

$$p(s)\frac{\mu s_0^\mu }{s^{1+\mu }}(s\mathrm{}),$$
(28)
We also assume that a company is composed of an arbitrary number $`K`$ of such sub-entities, with a certain a priori weight $`𝒬(K)`$. This means that if one chooses randomly a company in a country, there is a probability proportional to $`𝒬(K)`$ for this company to contain exactly $`K`$ sectors. We will see below that $`𝒬(K)`$ can be inferred from empirical data. The unnormalized distribution of growth rates for a given company size $`S`$ reads, in this new model:

$$𝒩(R,S)=\underset{K=1}{\overset{\mathrm{}}{}}𝒬(K)\underset{i=1}{\overset{K}{}}p(s_i)\text{d}s_i\delta \left(S\underset{i=1}{\overset{K}{}}s_i\right)\underset{i=1}{\overset{K}{}}P(\eta _i)\text{d}\eta _i\delta \left(R\underset{i=1}{\overset{K}{}}s_i\eta _i\right),$$
(29)
### B Distribution of company sizes

Let us first establish some results on the size distribution of companies $`𝒩(S)=\text{d}R𝒩(R,S)`$, a quantity much studied in a different context in . This will also enable us to relate $`𝒬(K)`$ to this empirically observable quantity. We first study the case the simplest case $`𝒬(K)`$=1. The following results are obtained using Laplace transforms, as above. We write:

$$\widehat{𝒩}(q,\lambda )=_0^{\mathrm{}}\text{d}S_{\mathrm{}}^{\mathrm{}}\text{d}R\mathrm{exp}\left[iqR\lambda S\right]𝒩(R,S)=\underset{K=1}{\overset{\mathrm{}}{}}\left[\text{d}s\text{d}\eta p(s)P(\eta )e^{iqs\eta \lambda s}\right]^K.$$
(30)
For simplicity, we assume that $`P(\eta )`$ is Gaussian with unit variance, and introduce the quantity $`g(q,\lambda )`$ as:

$$g(q,\lambda )=\text{d}sp(s)\left[1e^{q^2s^2/2\lambda s}\right],$$
(31)
in terms of which one finally has:

$$\widehat{𝒩}(q,\lambda )=\frac{1}{g(q,\lambda )}.$$
(32)
All the following asymptotic results will only depend on the behaviour of $`g(q,\lambda )`$ in the limit $`q,\lambda 0`$. If we first study the case $`q=0`$ from which $`𝒩(S)`$ is deduced, one finds that one has to distinguish the cases $`\mu <1`$ and $`\mu >1`$ . The small $`\lambda `$ behaviour of $`g`$ is found to be:

$$g(q=0,\lambda )\mathrm{\Gamma }(1\mu )(s_0\lambda )^\mu (\mu <1);g(q=0,\lambda )\lambda s(\mu >1).$$
(33)
For $`\mu >1`$, the average size of a sub-entity is finite and equal to $`s`$. Inverting the Laplace transform then leads to:

$$𝒩(S)\frac{1}{s},$$
(34)
for $`\mu >1`$, whereas for $`\mu <1`$, one has:

$$𝒩(S)\frac{\mathrm{sin}\pi \mu }{\pi }\frac{1}{s_0}\left(\frac{s_0}{S}\right)^{1\mu }.$$
(35)
The case $`\mu =1`$ is special and involves logarithmic corrections. Intuitively, the difference of behaviour comes from the fact that when $`\mu >1`$, the typical number of sub-entities behaves as $`KS/s`$, whereas when $`\mu <1`$, a single sub-entity represents a sizeable fraction of the whole company and $`KS^\mu S`$.

Assuming now that $`𝒬(K)`$ decays as a power-law $`𝒬(K)K^{1\alpha }`$ and that $`\mu >1`$, we find, using the same method, the following result for $`P(S)`$:

$$𝒩(S)\frac{1}{S^{1+\alpha }}(\alpha \mu );𝒩(S)\frac{1}{S^{1+\mu }}(\alpha \mu ).$$
(36)
The case $`\alpha \mu `$ corresponds to a situation where large companies only contain a small number of sectors (see below). This is not very plausible; furthermore, this would lead to a variance of the growth rate $`R`$ that grows proportionally to size $`S`$, i.e. $`\beta =0`$, which is not compatible with empirical data. Therefore we will assume in the following $`\alpha \mu `$. In this case there is a direct relation between the tail of $`𝒬(K)`$ and the tail of the size distribution of companies. Empirically, $`\alpha `$ is found to be close to unity: $`\alpha 1.05`$ .

### C Fluctuations of the growth rate

We now turn to the prediction of this model for the growth rate fluctuations. One need to consider three cases: $`\mu >2`$, $`1<\mu <2`$, $`\mu <1`$. The case $`1<\mu <2`$ is, as we will show, the interesting one. In the relevant situation where $`\alpha \mu `$, one can show that the value of $`\beta `$ and the shape of the rescaled distributions are independent of the value of $`\alpha `$, and we choose in the following, for simplicity $`𝒬(K)`$ to be constant.

We now need to study $`\widehat{𝒩}(q,\lambda )`$ with $`q0`$, that gives access to the distribution of the growth rate. This case can be treated by identifying the correct scaling region in the $`q,\lambda `$ plane, which means, in concrete terms, the scaling relation between $`R`$ and $`S`$. For example, when $`\mu >2`$, one expects the Central Limit Theorem to hold, suggesting $`R\sqrt{S}`$. So we set $`q=\theta \sqrt{\lambda }`$, and take the limit $`\lambda 0`$. If $`\mu >2`$, one finds:

$$g(q,\lambda )\lambda \left[s+\frac{\theta ^2}{2}s^2\right]+\mathrm{}$$
(37)
where the $`\mathrm{}`$ refers to higher order terms in $`\lambda `$, the precise form of which depend on the value of $`\mu `$. Therefore, in this regime,

$$\widehat{𝒩}(q,\lambda )\frac{1}{\lambda \left[s+\frac{\theta ^2}{2}s^2\right]}.$$
(38)
Now, we introduce the probability $`P(R|S)`$ to observe a certain growth $`R`$ given $`S`$. Then, by definition,

$$\widehat{𝒩}(q,\lambda )=_0^{\mathrm{}}\text{d}S_{\mathrm{}}^{\mathrm{}}\text{d}R\mathrm{exp}\left[iqR\lambda S\right]𝒩(S)P(R|S).$$
(39)
Assuming that $`P(R|S)=S^{1/2}\mathrm{\Pi }(RS^{1/2})`$ and using the above result for $`𝒩(S)`$ leads to:

$$\widehat{𝒩}(q=\theta \sqrt{\lambda },\lambda )\frac{1}{\lambda s}_0^{\mathrm{}}\text{d}u_{\mathrm{}}^{\mathrm{}}\text{d}v\mathrm{exp}\left[i\theta v\sqrt{u}u\right]\mathrm{\Pi }(v),$$
(40)
where we have set $`\lambda S=u`$ and $`R=v\sqrt{S}`$. It is now easy to see that Eqs. (38), (40) are satisfied if:

$$\mathrm{\Pi }(v)=\frac{1}{\sqrt{2\pi \sigma ^2}}\mathrm{exp}(\frac{v^2}{2\sigma ^2})\sigma ^2=\frac{s^2}{s}.$$
(41)
Therefore, in the case $`\mu >2`$, the variance of the relative growth rate decreases as $`S^{1/2}`$ (i.e. $`\beta =1/2`$), and the distribution of growth rates is Gaussian.

More interesting is the case $`1<\mu <2`$. It turns out that in this regime, the correct scaling is $`P(R|S)=S^{1/\mu }\mathrm{\Pi }(RS^{1/\mu })`$ and $`q=\theta \lambda ^{1/\mu }`$. In this regime, one now has, for small $`\lambda `$:

$$g(q,\lambda )\lambda \left[s+\mu |s_0\theta |^\mu I(\mu )\right]+\mathrm{},$$
(42)
where

$$I(\mu )=_0^{\mathrm{}}\frac{\text{d}t}{t^{1+\mu }}(1e^{t^2/2})=2^{1\mu /2}\mathrm{\Gamma }(\frac{\mu }{2}).$$
(43)
Now, it is easy to show that the scaling function $`\mathrm{\Pi }(v)`$ is now precisely a symmetric Levy stable distribution of index $`\mu `$, $`L_\mu (v)`$. This comes from the fact that the Fourier transform of $`L_\mu (v)`$ gives $`\mathrm{exp}(Au|\theta |^\mu )`$, where $`A`$ is a constant, so that the integral over $`u`$ in Eq. (40) now reproduces Eq. (42).

However, this is not the whole story. The reason is that a direct computation of the variance of $`R`$ (from the derivative of $`g(q,\lambda )`$ with respect to $`q^2`$ at $`q=0`$) leads an apparently contradictory scaling, since:

$$R^2|SS^{3\mu }$$
(44)
instead of $`S^{2/\mu }`$ as one might have naively expected from the scaling form of $`P(R|S)`$. One should now remember that Lévy stable distributions $`L_\mu (v)`$ with $`\mu <2`$ have tails decaying as $`v^{1\mu }`$, and thus a formally infinite variance. This means that $`R^2|S`$ is actually dominated by the region where $`R`$ is of order $`S`$, such that indeed:

$$R^2|SS_S^{+S}\frac{R^2\text{d}R}{|R|^{1+\mu }}S^{3\mu }.$$
(45)
Therefore, the Lévy stable distribution only holds in the scaling region $`RS^{1/\mu }`$. For $`RSS^{1/\mu }`$ the distribution is truncated. When $`\mu 1`$, the truncation ‘invades’ the scaling regime, and the result becomes again different for $`\mu <1`$, see below.

The conclusion of this analysis is that the variance of the relative growth rate $`r=R/S`$ scales in this regime with an exponent $`\beta =(\mu 1)/2`$, that interpolates between the standard value $`\beta =1/2`$ for $`\mu =2`$ and $`\beta =0`$ for $`\mu =1`$ (although these marginal cases are affected by logarithmic corrections). However, the surprising result is that in this regime the distribution of $`R`$ does not re-scale as a function of $`rS^\beta `$ but rather as $`rS^{(\mu 1)/\mu }`$.For other situations where this ‘anomalous scaling’ occur, see . We will discuss this in relation with empirical results in the next section.

When $`\mu <1`$, it is easy to show that now $`RS`$, i.e. $`\beta =0`$, which disagrees with empirical results. Furthermore, the result one finds for the scaling function $`\mathrm{\Pi }`$ is no longer universal. When $`\mu >1`$, the scaling function was universal in the sense that its shape only relied on the finiteness of the variance of $`\eta `$. When $`\mu <1`$, on the other hand, only a finite number of terms (sub-entities) contribute to the sum $`R`$, and one cannot expect a Central Limit Theorem to hold. When $`P(\eta )`$ is Gaussian of variance $`\sigma _0^2`$, all moments of $`P(R|S)`$ can be computed using the method of . One finds for example:

$$R^2|S=\frac{1\mu }{1+\mu }\sigma _0^2S^2$$
(46)
and:

$$R^4|S=3\left[\frac{(3\mu )(2\mu )(1\mu )+2\mu (1\mu )^2}{(3+\mu )(2+\mu )(1+\mu )}\right]\sigma _0^4S^4$$
(47)
Numerically, we have found that $`P(R|S)`$ could be rather well fitted by a ‘stretched Gaussian’ form, $`\mathrm{exp}(R/S)^\alpha `$ with $`\alpha <2`$. For example, for $`\mu =1/2`$, we found $`\alpha 4/3`$. This cannot be exact, however, since the exact kurtosis is found to be $`1.37143`$, whereas the kurtosis of the stretched Gaussian with $`\alpha =4/3`$ is $`1.22219`$. Note that $`R^4|S`$ would have a different value if $`P(\eta )`$ was non Gaussian: this shows that for $`\mu <1`$ the distribution $`\mathrm{\Pi }(v)`$ is non universal.

### D Conditional distribution of sector sizes

Finally, one can also compute in this model the conditional distribution of sector sizes, $`P(s|S)`$, which depends on the value of $`\alpha `$. When $`\alpha \mu `$, we find that $`P(s|S)`$ is the sum of two contributions: one power-law regime $`s^{1\mu }`$ for $`sS`$ which reflects the a priori distribution of sector sizes, and a small ‘hump’ for $`sS`$ of height which vanishes for large $`S`$:

$$P(s|S)\frac{\mu s_0^\mu }{s^{1+\mu }},(sS);P(s|S)\frac{F(s/S)}{S^{1+\mu \alpha }}(sS),$$
(48)
where $`F(.)`$ is a certain scaling function of order unity, that vanishes for $`s>S`$. For $`\mu <\alpha `$, one the other hand, the hump survives when $`S\mathrm{}`$ whereas the power-law regime disappears. In other words, when $`\alpha `$ is larger than $`\mu `$, the typical number of sectors $`K^{}`$ tends to be small and the typical size of the sectors is of the order of $`S`$ itself.

### E Stability upon aggregation

As mentioned in the introduction, the scaling of GNP growth rates is empirically found to be very similar to the scaling of company growth . In this respect, it is worth noting that Sutton’s construction is not stable upon aggregation: aggregating companies characterized by an exponent $`\beta =1/4`$ using Sutton’s prescription at the country level, leads to an exponent $`\beta =3/8`$. In our model, on the other hand, stability upon aggregation is by construction satisfied. The argument is very simple, and relies on the fact that the results are independent of the value of the company size exponent $`\alpha `$, provided $`\alpha <\mu `$. The idea is to consider the GNP itself as the sum of independent sectors, i.e. to remove the ‘shells’ that define companies, which are an intermediate level of clustering. A country is therefore in this description a ‘super-company’ with many sectors. The sectors are the same than previously, so they have the very same Pareto tail of exponent $`\mu `$ for their size distribution. Now we just have to assume that there is a given distribution $`Q^{}(K)`$ that describes the distribution of the number of independent sectors in different countries. If $`Q^{}(K)`$ has a Pareto tail with exponent $`\alpha ^{}`$ with $`\alpha ^{}<\mu `$, we can repeat the above arguments and find the same value for the exponent $`\beta =(\mu 1)/2`$ at the country level.

## IV Discussion – Comparison with empirical data

We have shown how several interesting asymptotic predictions of Sutton’s model could be derived. Apart from Sutton’s central result, namely that the root mean square of the growth rate decreases with the company size $`S`$ as $`S^{1/4}`$ (i.e. $`\beta =1/4`$), we have shown that the distribution of growth rate should be asymptotically Gaussian, with a kurtosis that decays as $`S^{1/2}`$. The first result is, as noticed by Sutton, in rather good agreement with the empirical results of Stanley et al., although the value of the exponent $`\beta `$ is closer to $`0.18`$. The second result is however problematic, since in this model one should find a rescaled distribution of growth rates that progressively deforms with $`S`$ as to become Gaussian for very large $`S`$, whereas the data indicates that the rescaled distribution is actually to a good approximation independent of $`S`$ and non Gaussian. A closer look at the data of Stanley et al. in fact suggests that non Gaussian tails are more pronounced for larger companies .

We have then explored an alternative to Sutton’s model, where the size of the ‘sub-entities’ is postulated to be a power-law (Pareto) with an exponent $`\mu `$. This is motivated by the ubiquitous observation of Pareto distributions for company sizes, and by a simple dynamical model that indeed leads to a stationary power-law distribution of sizes. In this respect, it is not obvious how one would write a natural dynamics for sector growth that leads to Sutton’s ‘microcanonical’ ensemble where all partitions are equiprobable. As a function of $`\mu `$, we have found three qualitatively different regimes. In particular, when $`1\mu 2`$, we find that $`\beta =(\mu 1)/2`$. The empirical value $`\beta =0.18`$ corresponds to $`\mu =1.36`$, which is indeed larger than the value of $`\alpha 1.05`$ reported for firm sizes in , as required for the consistency of our analysis. Our model then predicts an $`S`$ independent distribution for the growth rate multiplied by $`S^{(\mu 1)/\mu }`$ (and not by $`S^\beta `$), which is a symmetric Lévy stable distribution. Note however that these are asymptotic results that require $`S^{(\mu 1)/\mu }1`$, such that the scaling region is not affected by truncation effects (see the discussion after Eq. 44). For finite $`S`$ and $`\mu `$ close to one, one expects strong finite size effects, and a very slow convergence towards the asymptotic value. This is why numerical simulations are needed to explore the moderate $`S`$ regime. We show in Fig. 1 the distribution of rescaled returns obtained from a numerical simulation for $`\mu =1.3`$, a Gaussian $`P(\eta )`$ and for $`S500`$ and $`S=5000`$. Notice $`\mathrm{\Pi }(v)`$ can be very roughly approximated by a symmetric exponential for small enough $`S`$: $`\mathrm{\Pi }(v)=\mathrm{exp}(|v|/v_0)`$, as suggested by the empirical data. The systematic deviations from this form both at small values of $`v`$ and at large $`v`$ are qualitatively similar to the ones observed empirically (see ): $`\mathrm{\Pi }(v)`$ is actually parabolic for small values of $`v`$ and decays slower than exponentially at large $`v`$. One also observes strong finite size effects: as $`S`$ increases, the tail of the distribution becomes fatter and fatter. This is expected since asymptotically this distribution should converge to a Lévy distribution with a power-law tail, which is indeed fatter than an exponential. Note that we expect only qualitative agreement with empirical data, since the assumption that $`P(\eta )`$ is Gaussian at the sector level is probably incorrect and does influence the detailed shape of $`\mathrm{\Pi }(v)`$ for finite $`S`$. However, as mentioned above, the systematic ‘fattening’ of the tails as $`S`$ becomes larger seems to be present in the empirical results of Stanley et al. .

It would be extremely interesting to obtain direct empirical information on the conditional distribution of the size $`s`$ and total number $`K`$ of the sub-entities for a fixed $`S`$. We have seen that Sutton’s model predicts a Bose-Einstein distribution for $`s`$, that behaves as $`1/s`$ for $`s\sqrt{S}`$, and beyond which it falls rapidly, whereas $`K`$ becomes peaked around the value $`\sqrt{S}\mathrm{ln}S`$. In our model, on the other hand, the conditional distribution of $`s`$ is, as soon as $`\mu \alpha `$ and for $`sS`$, identical to the a priori distribution $`p(s)s^{1\mu }`$, and the total number $`K`$ peaks around the value $`S/s`$. Therefore, a tangible difference between the two models is that the power-law regime has an exponent $`1`$ in the Sutton model and the size of the sectors rarely exceeds $`\sqrt{S}`$, whereas the the distribution is a power-law with exponent $`1+\mu 2.35`$ up to $`S`$ in our model (with possibly a small hump for $`sS`$, see Eq. (48)). We hope that these falsifiable predictions of the two descriptions, as well as the quantitative description of the rescaled distribution of growth rates given above, will motivate further empirical and theoretical research, and help elucidate the ‘scaling puzzle’ of company growth.

## Note added:

While completing this work, X. Gabaix sent us a very interesting preprint where related arguments (although in details quite different from ours) are discussed. See: X. Gabaix, Power-laws and the origin of the business cycle, working paper, October 2002.

## Acknowledgments

We want to thank X. Gabaix, M. Potters, J. Scheinkman and in particular J. Sutton for interesting discussions. J.P. B also wants to thank the organizers of the Bali conference on Econophysics that took place in August 2002 and that motivated this work.