Entry preemption through capacity expansion in the U.S. titanium industry

This study investigates the impact of expected excess capacity on the probability of firm entry into a single-product oligopoly, specifically, the U.S. titanium industry. Predicted values for excess capacity as well as its components, production, and capacity are generated. By disentangling the components of excess capacity and estimating them independently, it is possible to separate incumbents' discretionary actions regarding capacity expansion, which may preempt entry, from the effects of underlying cycles in demand, which subsequently affect production. These predicted values are utilized in logit models which indicate that expected levels of capacity expansion did appear to decrease the probability of firm entry, while expected levels of production and excess capacity had no effect on the probability of entry into the U.S. titanium industry.     

Barriers to entry in the U.S. and Japanese titanium industries

The purpose of this paper is to construct and empirically test a model designed to determine the impact of increases in production capacity and any related excess capacity on the probability of entry into the Japanese titanium industry. These results will be compared to those of an earlier study pertaining to the U.S. titanium industry. Relevant predictor variables are employed in a model to obtain estimates of changes in titanium production and capacity. These estimates are then used in a logit analysis to determine their impact on the probability of firm entry into the Japanese titanium industry. The results of this analysis, unlike those from the earlier U.S. study, indicate that predicted capacity expansion by incumbent Japanese firms had no significant impact on the probability of entry.     

The Behaviour of Declining Industries

This paper examines how the prospect of imminent exit by a competitor in a declining industry affects the market behaviour of that industry prior to exit. We show that 'survivor' firms have an incentive to increase their holdings of inventories and to hold excess capacity before exit occurs. Preparation for the failure of a rival will also involve increasing output. This will push down the market price and may hasten the rival firm's demise. The welfare consequences of these actions are mixed but can be very different from the same actins in a growing or stable industry. In particular, holding excess capacity or increased inventories may be procompetitive.     

The Impact of Cost Changes on Industry Entry and Exit

Increases in costs may have interesting, non-obvious effects on industry entry and exit. Three cases are possible when costs rise: the competitor neutral case, in which entry decreases and exit increases, entrant favoring, in which entry and exit both increase, and incumbent favoring, in which entry and exit both decrease. The model places restrictions on which outcomes are possible given which costs rise (marginal or fixed). The model can be used to examine the impacts of cost-increasing regulation or exogenous process innovation on industry entry and exit.      

理性进入和退出 走出微利经济

本文认为,过度竞争与企业的进入、退出有关。如果能够理性进入和退出,就能消除过度竞争,进而走出微利经济。在此基础上,本文就企业进入的内涵、条件、案例进行了论述和分析,并就企业退出的内涵、障碍、案例进行了论述和分析。     

中国电解铝行业市场支配力变迁的实证研究——基于2002—2009年的数据

选取2002—2009年中国电解铝行业的月度数据,以Baker和McGahan的NEIO模型为基础,利用未预期的负冲击是否会导致卡特尔厂商对竞争对手的欺诈行为而打价格战的模型,检验2002—2009年期间串谋等卡特尔行为是否存在。实证结果表明:2006—2009年期间中国电解铝行业存在明显的市场支配力,而不能确定2002—2005年市场支配力是否存在;2006—2009期间的平均市场支配力比2002—2005年高出0.3。提出行业本身属性、政府政策的引导、大企业保持额外产能是导致这种差距的三个主要原因。     

Entry and Exit in International Markets: Evidence from Chilean Data*

Several studies examine the patterns and determinants of entry and exit in manufacturing industries. Not much work exists on entry and exit in international markets. This paper uses Chilean data to analyze the industry‐level determinants of entry and exit in export markets. First, we show as stylized facts that entry and exit rates differ across industries, vary over time, and are positively correlated. Then, we study the main determinants of these patterns. Our econometric analysis shows that within‐industry heterogeneity, measured by differences in productivity or other firm characteristics, has a significant effect on plant turnover in international markets. Our findings reveal that trade costs, factor intensities, and fluctuations in the real exchange rate play a minor role explaining entry and exit. This last result is consistent with hysteresis in international markets.     

Entry and exit as a source of aggregate productivity growth in two alternative technological regimes

This paper proposes a neo-Schumpeterian model in order to discuss how the mechanisms of entry and exit contribute to industry productivity growth in alternative technological regimes. Our central hypothesis is that new firms generate gains in aggregate productivity by increasing both the productivity level and competition intensity. By assuming that firms learn about the relevant technology through a variety of sources, and by allowing a continuous flow of entry and exit into the market, our study shows that firm exit and output contraction take mostly place among less productive firms, while output expansion and entry are concentrated among the more efficient ones. The greater is the competitive pressure generated by new entrants, the higher is the expected productivity level of established firms. Overall, our analysis suggests that micro analysis is the proper complement to aggregate industry studies, as it provides a considerable insight into the causes of productivity growth.     

Entry, exit and business cycles in a general equilibrium model

This paper studies the role of entry and exit in the short run behavior of a general equilibrium model with industry dynamics. For tractability, and to preserve potential asymmetries in the impulse responses, I focus on the transition dynamics of the economy after shocks. Entry and exit are found to be insensitive to productivity shocks of reasonable magnitude. Moreover, the dynamics of GDP are insensitive to fluctuations in entry and exit rates, and any asymmetries are negligible. As an application of the model, the paper also asks whether firing costs may interact with entry and exit to affect transition dynamics after shocks, finding that they do not.     

Entry and exit from Greek manufacturing industry: a test of the symmetry hypothesis

The paper examines the role of trade patterns in the entry and exit decisions of firms and tests the existence of symmetry between entry and exit factors. Trade patterns were found, through their entry and exit impact, to affect the structure of Greek industry rather unfavourably. Prospects seem to be bleaker within the integrated European market of the 1990s. The lack of symmetry leads to increasing concentration. The gloomy outlook is improved by the strong stand of existing, competitive firms.     

A theory of competitive industry dynamics with innovation and imitation

Empirical evidence on industry life-cycle reveals a pattern in which innovation rates remain fairly stable or are perhaps even higher at early stages, while patenting increases sharply as the industry matures. This increase in patenting in later stages is accompanied by net exit and lower rates of output growth and price decline. In this paper, we develop a dynamic model of a competitive industry with innovation and imitation that is consistent with these stylized facts. We derive an equilibrium growth path, along which leading firms invest in increasing the stock of technological knowledge and choose not to prevent imitation by other firms as long as the industry remains relatively small. As the industry expands including new entry, the leaders' optimal amount of investment gradually declines. We show that under some rather general conditions, there would exist a scale of the industry where innovating firms would choose to start preventing free imitation, bringing further expansion of the industry through new entry to a halt and causing net exit.     

INDUSTRY DYNAMICS AND THE MINIMUM WAGE: A PUTTY‐CLAY APPROACH

We document two new findings about the industry‐level response to minimum wage hikes. First, restaurant exit and entry both rise following a hike. Second, there is no change in employment among continuing restaurants. We develop a model of industry dynamics based on putty‐clay technology that is consistent with these findings. In the model, continuing restaurants cannot change employment, and thus industry‐level adjustment occurs gradually through exit of labor‐intensive restaurants and entry of capital‐intensive restaurants. Interestingly, the putty‐clay model matches the small estimated short‐run disemployment effect of the minimum wage found in other studies, but produces a larger long‐run disemployment effect.     

New technology and the economic organization of the clothing industry

The economic organization of an industry is ultimately determined by the cost functions of its component firms. The costs that matter for the competitive state of an industry are not just long-run variable costs but also the costs of entry to and exit from the industry, and the joint costs of different products that the firms in the industry produce. In the clothing industry the costs of creating and implementing new designs is a further important factor affecting competition between firms. Since costs are largely determined by technology, we expect repercussions on the organization of the industry when technology changes. Application of the new information technologies in the clothing industry will encourag agglomerations by growth and by merger, with larger firms producing a wider range of products and introducing new products faster than hitherto. Trends in the geographic organization of production will also be reversed.     

Excess capacity as a policing device

A great deal of recent work has been devoted to the question of whether an incumbent firm can successfully deter entry by investing in excess capacity. This paper demonstrates that a dominant firm may invest in excess capacity even when it is certain that this will not deter entry. Rather, the excess capacity is held by the dominant firm in order to ensure that its competitors will exercise appropriate restraint in their own output decisions. An example is provided that illustrates that the rate of return on the capital invested in excess capacity may be very high.     

产业发展效率视角的企业家行为配置研究新进展

企业家生产性行为的合理配置直接决定着经济结构变迁和产业发展效率。具体来说：企业家对产业目标市场的进入与退出能力和水平决定了产业发展的方向以及产业结构之间的合理性;企业家的生产性产业投资行为与水平决定了产业发展的速度;企业家的技术选择和技术吸收能力决定了产业发展的质量和产业结构的高级化;企业家对生产组织与生产方式选择的生产性行为也与产业发展效率直接关联。本文对国外这几个方面研究的最新进展进行了文献回顾与述评。     

Sectoral patterns of firm exit in Italian provinces

There is considerable variation in the firm exit rate across the 103 provinces in Italy. This paper investigates a range of determinants of the exit rate for twelve different sectors in the Italian provinces for a period of eleven years. The analysis shows that the exit rate is positively affected by entry in the previous year (displacement) in the same sector. Previous exit has a different effect for the manufacturing industry as compared to the business services. More specifically, exit persists in manufacturing while in the business services it is rather exit in related sectors in the same province that leads to increased exit, probably due to the loss of clients or suppliers. The presence of industrial districts diminishes exit, especially in two manufacturing sectors (Food and Clothing), Commerce and Transport. Provinces with strong trademark activity appear to have lower exit rates.     

R&D,free entry,and social inefficiency

We employ a three-stage game model with cost-reducing research and development (R&D) that is subject to spillovers to consider the problem of excess entry under free-entry equilibrium relative to the social optimum. Firms choose to enter or exit a market in the first stage, choose R&D in the second stage and output in the final stage. Results show that there is socially inefficient or excessive entry in equilibrium. However, we uniquely demonstrate that research spillovers hold the key to whether established results regarding socially inefficient entry hold. Specifically, excessive entry occurs as long as research spillovers are relatively small, but this is not necessarily the case with large spillovers. Some policy implications are discussed.     

Entry and exit echoes

While aggregate data do not show the investment echoes predicted by vintage-capital models, echoes arise in rates of entry and exit of firms at the industry level. Moreover, industries where prices decline rapidly experience early ‘shakeouts’. The relation emerges naturally in a vintage-capital model in which exit of firms sometimes accompanies the replacement of their capital, and in which a shakeout is the first replacement ‘echo’ of the capital created when the industry is born.     

Irrationality and monopolistic competition: An evolutionary approach

This paper shows that a monopolistically competitive equilibrium can evolve without purposive profit maximization. Specifically, this paper formulates a precise evolutionary dynamic model of an industry where there is continuous entry of firms that randomly select their output levels on entry and fix their output levels thereafter. Firms exit the industry if they fail to pass the survival test of making nonnegative wealth. This paper shows that the industry converges in probability to the monopolistically competitive equilibrium as the size of each firm becomes infinitesimally small relative to the market, as the entry cost becomes sufficiently small, and as time gets sufficiently large. Consequently, in the limit, the only surviving firms are those producing at the tangency of the demand curve to the average cost curve and no potential entrant can make a positive profit by entry.     

Entry,market turbulence and industry employment growth

This paper investigates the relationship between industrial dynamics in terms of firm entry, market turbulence and employment growth. Do entry of firms, the composition of industry dynamics (net entry) and market turbulence (entry and exit) influence industrial employment growth? This paper provides an empirical investigation, using unique data for 42 disaggregated Swedish industrial sectors during the period 1997–2001. It is hypothesised that the importance of entering firms, net entry and market turbulence may differ significantly across industries. A quantile regression method is used in order to detect industrial differences in the response to industrial employment growth. The empirical evidence shows that, on the one hand, firm entry and market turbulence have a positive effect on employment for fast growing industries and that the effect is larger for high growth industries. On the other hand, the composition of industry dynamics in terms of net entry rates has a more dispersed effect across all industries, even though the effect of net entry is larger for high growth industries.