What is the random growth hypothesis and how does it play into industry concentration?

There is randomness in a firm’s growth. Hence, past performance is rarely a good indicator for future performance. A firm’s growth is independent of its size - Law of proportionate effect (LPE) or Gibrat’s law. However, seller concentration is still not a matter of chance. There is a natural tendency for an industry to become increasingly concentrated over time such as described above in the industry lifecycle.