The Pareto distribution is continuous. It is widely used for the investigation of other distributions associated with such empirical phenomena as city population sizes, the occurrence of natural resources, the size of companies, personal incomes, stock price fluctuations, and error clustering in communication circuits.
The Location parameter is the lower bound for the variable. After you select the Location parameter, you can estimate the Shape parameter. The Shape parameter is a number greater than 0, usually greater than 1. The larger the Shape parameter, the smaller the variance and the thicker the right tail of the distribution. |
Conditions and parameters are complex. See: Fishman, G. Springer Series in Operations Research. NY: Springer-Verlag, 1996.