Entry, exit, and shakeouts in the United States in new manufactured products

During their early evolution, new manufacturing industries commonly experience a ‘shakeout’ period during which the number of producers declines by 50% or more. In order to gain additional insight into shakeouts, we develop new information on the patterns of entry and exit for 16 major new manufactured products from their commercial inception through 1980. We use a model in which entry and exit coordination problems can generate shakeouts to structure the analysis of the data. We find that shakeouts are distinguished by entry falling off sharply but rates of exit remaining steady or rising over time.