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Exit from Declining Industries: "Shakeout" or "Stakeout"?

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  • Marvin B. Lieberman
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    Abstract

    Data on 30 chemical products are used to examine the sequence of divestment in declining industries. Small firms and plants might be expected to close first, given lack of scale economies. However, recent theories suggest that large producers may have greater incentives to exit or cut capacity. Both predictions receive some empirical support. Small plants had higher rates of closure, and most exiting firms were small. Holding the influence of plant size constant, large multiplant firms were more likely to close individual plants.

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    Bibliographic Info

    Article provided by The RAND Corporation in its journal RAND Journal of Economics.

    Volume (Year): 21 (1990)
    Issue (Month): 4 (Winter)
    Pages: 538-554

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    Handle: RePEc:rje:randje:v:21:y:1990:i:winter:p:538-554

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    Cited by:
    1. Sherrill Shaffer, 2002. "Conduct in a Banking Monopoly," Review of Industrial Organization, Springer, vol. 20(3), pages 221-238, May.
    2. Richard Harris & John Moffat, 2011. "Plant-level Determinants of Total Factor Productivity in Great Britain, 1997-2006," SERC Discussion Papers 0064, Spatial Economics Research Centre, LSE.
    3. Kovenock, D. & Phillips, G.M., 1995. "Capital Structure and Product Market Behavior: An Examination of Plant Exit and Investment Decisions," UFAE and IAE Working Papers 313.95, Unitat de Fonaments de l'Anàlisi Econòmica (UAB) and Institut d'Anàlisi Econòmica (CSIC).
    4. John Sutton, 1996. "Gibrats Legacy," STICERD - Economics of Industry Papers 14, Suntory and Toyota International Centres for Economics and Related Disciplines, LSE.
    5. Suárez, Fernando F., 1960- & International Center for Research on the Management of Technology., 1991. "Dominant designs and the survival of firms," Working papers 3340-91. WP (Internationa, Massachusetts Institute of Technology (MIT), Sloan School of Management.
    6. Bruce Blonigen & Benjamin Liebman & Wesley Wilson, 2013. "Antidumping and Production-Line Exit: The Case of the US Steel Industry," Review of Industrial Organization, Springer, vol. 42(4), pages 395-413, June.
    7. Feil, Jan-Henning & Musshoff, Oliver, 2013. "Modelling investment and disinvestment decisions under competition, uncertainty and different market interventions," Economic Modelling, Elsevier, vol. 35(C), pages 443-452.
    8. Andrew B Bernard & J. Bradford Jensen, 2007. "Firm Structure, Multinationals, and Manufacturing Plant Deaths," The Review of Economics and Statistics, MIT Press, vol. 89(2), pages 193-204, May.
    9. Andrew Eckert & Heather Eckert, 2014. "Regional Patterns in Gasoline Station Rationalization in Canada," Journal of Industry, Competition and Trade, Springer, vol. 14(1), pages 99-122, March.
    10. Takahashi, Yuya, 2013. "Estimating a War of Attrition: The Case of the U.S. Movie Theater Industry," Discussion Paper Series of SFB/TR 15 Governance and the Efficiency of Economic Systems 424, Free University of Berlin, Humboldt University of Berlin, University of Bonn, University of Mannheim, University of Munich.
    11. Richard Kneller & Danny McGowan & Tomohiko Inui & Toshiyuki Matsuura, 2012. "Closure within multi-plant firms: evidence from Japan," Review of World Economics (Weltwirtschaftliches Archiv), Springer, vol. 148(4), pages 647-668, December.

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