In an economy with stochastic overlapping generations of firms, how do we easily understand the measure of new firms born?
The set-up states:
"In each period, measure $\rho\in(0,1)$ of new firms are born and are endowed with net worth $w_0>0$. Firms survive to the next period with probability $(1-\rho)$ and hence the measure of firms alive in every period is 1."
- What is the measure of firms?
- How does the measure of firms relate to the firm's survival probability onto the next period?
I think I am not understanding clearly when the author uses these related but distinct terms. Can someone explain easily?