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Productivity and Market Selection of French Manufacturing Firms in the Nineties

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  • Flora Bellone
  • Patrick Musso
  • Michel Quéré
  • Lionel Nesta

Abstract

In this paper, we analyse post-entry and pre-exit performance of French manufacturing firms using a dataset covering 14 industries over the period 1990-2002. Our purpose is to shed light on the working of market selection mechanisms within French manufacturing industries. We found that market selection in France rightly operates in favour of more productive firms, but displays some potential inefficiency in selecting more severely new firms compared to mature firms. This claim is based on three results. First, on average, young firms fail to survive when they are faced with a small productivity disadvantage with respect to incumbents. By contrast, mature firms exit the market only when they are confronted by a large, persistent, and increasing productivity gap with their surviving counterparts. Second, we show that successful entrants do not easily catch up to the average size of the industry despite the fact that they exhibit significant TFP and profitability advantages over incumbents. This reveals the existence of barriers to growth for young firms. Thirdly, we show that, on the whole, productivity improvements due to market selection mechanisms within French manufacturing industries are primarily due to market share reallocation across incumbents and that the net entry effect is weak relative to the findings for other industrialised countries. JEL Classification: D24, L11, L60.

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Bibliographic Info

Article provided by Presses de Sciences-Po in its journal Revue de l'OFCE.

Volume (Year): 97 bis (2006)
Issue (Month): 5 ()
Pages: 319-349

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Handle: RePEc:cai:reofsp:reof_073_0319

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Web page: http://www.cairn.info/revue-de-l-ofce.htm

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Keywords: entry exit patterns; total factor productivity; France; firm-level data; market selection;

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References

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Citations

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Cited by:
  1. Carlos Carreira & Paulino Teixeira, 2011. "The shadow of death: analysing the pre-exit productivity of Portuguese manufacturing firms," Small Business Economics, Springer, vol. 36(3), pages 337-351, April.
  2. Daniel Fackler & Claus Schnabel & Joachim Wagner, 2013. "Establishment exits in Germany: the role of size and age," Small Business Economics, Springer, vol. 41(3), pages 683-700, October.
  3. Tran Quoc Trung & Nguyen Thanh Tung & Tran Duy Dong & Phan Hoai Duong, 2008. "Performance of export-oriented small and medium-sized manufacturing enterprises in Viet Nam," Working Papers 5408, Asia-Pacific Research and Training Network on Trade (ARTNeT), an initiative of UNESCAP and IDRC, Canada..
  4. Bontemps, Christophe & Bouamra-Mechemache, Zohra & Simioni, Michel, 2011. "Quality Labels and Firm Survival in the Food Industry," 2011 International Congress, August 30-September 2, 2011, Zurich, Switzerland 114263, European Association of Agricultural Economists.
  5. Bontemps, Christophe & Bouamra-Mechemache, Zohra & Simioni, Michel, 2012. "Quality Labels and Firm Survival in the French Cheese Industry," IDEI Working Papers 741, Institut d'Économie Industrielle (IDEI), Toulouse.
  6. Blanchard, Pierre & Huiban, Jean-Pierre & Mathieu, Claude, 2011. "Productivity, sunk costs and firm exit in the French food industry," 2011 International Congress, August 30-September 2, 2011, Zurich, Switzerland 114526, European Association of Agricultural Economists.
  7. Pierre Blanchard & Jean-Pierre Huiban & Claude Mathieu, 2012. "The determinants of firm exit in the French food industries," Review of Agricultural and Environmental Studies - Revue d'Etudes en Agriculture et Environnement, INRA Department of Economics, vol. 93(2), pages 193-212.
  8. Guillaume Daudin & Jean-Luc Gaffard & Francesco Saraceno, 2007. "Ordre et désordre dans l'échange international. Une revue de littérature," Revue de l'OFCE, Presses de Sciences-Po, vol. 100(1), pages 143-174.
  9. Fackler, Daniel & Schnabel, Claus & Wagner, Joachim, 2012. "Lingering illness or sudden death? Pre-exit employment developments in German establishments," Discussion Papers 82, Friedrich-Alexander-University Erlangen-Nuremberg, Chair of Labour and Regional Economics.
  10. repec:spo:wpecon:info:hdl:2441/3201 is not listed on IDEAS

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