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A structural model of firm and industry evolution: Evidence from Chile

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  • Şeker, Murat

Abstract

Although there are many models that yield a simple interpretation of the basic features of firm and industry evolution, they are too stylized to confront the micro-level data in a formal quantitative analysis. By introducing heterogeneity to a stylized industry evolution model, I explain several novel features of the data, such as the shape of the size distribution and the relationships between age, size, and the hazard rate of exit. In the model, heterogeneity arises through a combination of exogenous efficiency differences and accumulated innovations resulting from R&D investments. Integrating these forces allows the model to perform well quantitatively in fitting data on Chilean manufacturers.

Suggested Citation

  • Şeker, Murat, 2012. "A structural model of firm and industry evolution: Evidence from Chile," Journal of Economic Dynamics and Control, Elsevier, vol. 36(6), pages 891-913.
    • Handle: RePEc:eee:dyncon:v:36:y:2012:i:6:p:891-913
    DOI: 10.1016/j.jedc.2012.01.007
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    Cited by:

    1. Chen Yeh, 2017. "Are firm-level idiosyncratic shocks important for U.S. aggregate volatility?," Working Papers 17-23, Center for Economic Studies, U.S. Census Bureau.
    2. Murat Şeker & Mehmet Fatih Ulu, 2022. "Effects of Policy Reforms on Firm Innovation," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 61(1), pages 95-121, August.
    3. Seker, Murat & Ulu, Mehmet Fatih, 2017. "Effects of Licensing Reform on Firm Innovation: Evidence from India," MPRA Paper 80382, University Library of Munich, Germany.
    4. Chen Yeh, 2016. "Are firm-level idiosyncratic shocks important for U.S. aggregate volatility?," Working Papers 16-47, Center for Economic Studies, U.S. Census Bureau.

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    More about this item

    Keywords

    Industry evolution; Firm dynamics; Endogenous product scope; Innovation; Parameter estimation;
    All these keywords.

    JEL classification:

    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
    • L6 - Industrial Organization - - Industry Studies: Manufacturing
    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives
    • C15 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Statistical Simulation Methods: General

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