Price-cost margins in Dutch manufacturing

Summary The relation between price-cost margins and seller concentration and its development over the business cycle is investigated for Dutch manufacturing (1974–1986). We test the finding of Domowitz, Hubbard and Petersen (1986a and 1986b), that U.S. manufacturing (1958–1981) price-cost margins are more procyclical in more concentrated industries using a new data set. Considering business cycle measures at both industry and aggregated level, export share, level of competing imports and buyer concentration we find that (1) a business cycle upswing (downturn) leads to high (low) price-cost margins and (2) the test of more procyclical price-cost margins in more concentrated industries is inconclusive. Whether the finding of Domowitz, Hubbard and Petersen is supported depends on the business cycle measure used. Separate intertemporal and inter-industry estimates for most influences on price-cost margins are provided.Financial support from The Netherlands Organization for Scientific Research (NWO) is acknowledged. An earlier version of this paper was presented at the XVII-th Annual Conference of the European Association for Research in Industrial Economics (EARIE), Lisbon, 2–4 September 1990. We like to thank Rene den Hertog for computational assistance and Aad Kleijweg, Dan Kovenock, Keith Cowling, Kees Zeelenberg, David Audretsch, Sjaak Vollebregt, Jan van Dalen, Jeroen Potjes and two anonymous referees for helpful comments.     

Retail profit margins in Japan and Germany

Retail Profit Margins in Japan and Germany. — This study compares the determinants of retail profit margins in Japan and Germany. Although several studies consider the peculiarities of the Japanese society and its economic structure, the comparison in this study is the first systematic, empirical analysis of the consequences of these characteristics for Japanese retail profit margins. For this purpose, two extensive data sets are used and a mark-up relationship is tailored to examine differences in Japanese and German retail profit margins. The empirical outcomes indicate that small firms can survive more easily in Japan than in Germany. This explains the abundance of small stores in Japan.     

The intertemporal stability of the concentration-margins relationship in Dutch and U.S. manufacturing

Factors influencing price-cost margins are investigated using a rich panel data base of the Dutch manufacturing sector. Attention is devoted to the intertemporal stability of the relationship explaining price-cost margins and to a comparison with U.S. results. Our results indicate that isolated cross-section analyses can be misleading. Evidence is provided for similarities and dissimilarities between the U.S. and the Netherlands when explaining price-cost margins. Dutch margins are influenced by industry-specific factors such as sales changes, import competition, capital intensity and operating expenses. Domestic seller concentration, aggregate capacity utilization and export intensity play no distinct roles.This research was sponsored in part by the Economics Research Foundation, which is part of the Netherlands Organization for Scientific Research. We wish to thank H. W. de Jong, Leo Sleuwaegen, David Audretsch and Aad Kleijweg for their useful comments.     

Entrepreneur location decisions across industries

In this paper we analyse whether entrepreneur location decisions differ across industries and identify the factors determining the choice of location between rural and urban environments. Firm location is based on a new taxonomy developed over the influential three dimensions of Hayter’s (1997) approach. The paper uses data from sample of one thousand Portuguese firms. We present a stylized theoretical model to determine how these new five dimensions influence firm’s location and test the model through a logistic regression. Our results show that that the location decisions depend on the sector of activity, type of area (urban vs. rural) and the characteristics of the entrepreneur. We find that companies engaged in knowledge intensive business services prefer to locate in urban areas. From an institutional point of view, firms prefer to locate in rural areas.     

Linking Entrepreneurship and Economic Growth

In the 1980s stagflation and high unemployment caused a renewed interest in supply side economics and in factors determining economic growth. Simultaneously, the 1980s and 1990s have seen a reevaluation of the role of small firms and a renewed attention for entrepreneurship. The goal of this survey is to synthesize disparate strands of literature to link entrepreneurship to economic growth. This will be done by investigating the relationship between entrepreneurship and economic growth using elements of various fields: historical views on entrepreneurship, macro-economic growth theory, industrial economics (Porter's competitive advantage of nations), evolutionary economics, history of economic growth (rise and fall of nations) and the management literature on large corporate organizations. Understanding the role of entrepreneurship in the process of economic growth requires the decomposition of the concept of entrepreneurship. A first part of our synthesis is to contribute to the understanding of the dimensions involved, while paying attention to the level of analysis (individual, firm and aggregate level). A second part is to gain insight in the causal links between these entrepreneurial dimensions and economic growth. A third part is to make suggestions for future empirical research into the relationship between (dimensions of) entrepreneurship and economic growth.     

The Life Cycle of the U.S. Tire Industry

We introduce a new theory of industry evolution. According to our model, the nonmonotonicity in firm numbers found in many young industries is a consequence of the gradual decline in unit costs. Early stages of the industry life cycle, when unit costs and profit margins are high, display positive net entry rates. In later stages, declining unit costs and increasing competition limit the market room for (fringe) firms accumulating in a shakeout. The model explains paths of output, price level, and firm numbers using a recursive system of equations. We apply the model to the U.S. tire industry.     

The dynamics of industrial organization

This paper introduces the special issue of The Review of Industrial Organization on ‘The Dynamics of Industrial Organization’. What binds these papers together is a focus on markets in motion—the process by which new firms enter an industry, either grow and survive, or else ultimately exit out of the industry. In contrast to more traditional static analyses, the concern of these papers is identifying where do firms come from and what happens subsequent to their entry. Influences of geographic as well as product space are found to exert an influence on the dynamics of industrial organization.

     

Behaviour of Retail Entrepreneurs

Retailers' goal attainmet is studied using a model consisting of relationships concerning the productivity of labour and floor-space. Evidence from large supermarkets shows that retailers concentrate on the maximising of the value of annual sales rather than on maximising annual profit.     

Allocation and productivity of time in new ventures of female and male entrepreneurs

This paper investigates time allocation decisions in new ventures of female and male entrepreneurs using a model that distinguishes between effects of preferences and productivity on the number of working hours. Using data of 1,158 entrepreneurs we find that the preference for work time in new ventures relates to start-up motivation, propensity to take risk and availability of other income. Productivity of work time relates to human, financial and social capital endowments and the prevalence of outsourcing activities. This study also evaluates actual profit effects 1 year after start-up. We find that on average women invest less time in the business than men. This can be attributed to both a lower preference for work time (driven by risk aversion and availability of other income) and a lower productivity per hour worked (due to lower endowments of human, social and financial capital).     

Firm Siz and Efficiency in Inovation: Reply

Small Business Economics -