Advanced Search
MyIDEAS: Login to save this paper or follow this series

The determinants of firm exit in the French food industries

Contents:

Author Info

  • Pierre Blanchard

    ()
    (ERUDITE - Equipe de Recherche sur l'Utilisation des Données Individuelles Temporelles en Economie - Université Paris-Est Créteil Val-de-Marne (UPEC) : EA437 - Université Paris-Est Marne-la-Vallée (UPEMLV))

  • Jean-Pierre Huiban

    ()
    (ALISS - Alimentation et sciences sociales - Institut national de la recherche agronomique (INRA) : UR1303)

  • Claude Mathieu

    (ERUDITE - Equipe de Recherche sur l'Utilisation des Données Individuelles Temporelles en Economie - Université Paris-Est Créteil Val-de-Marne (UPEC) : EA437 - Université Paris-Est Marne-la-Vallée (UPEMLV))

Abstract

A semi-parametric approach is used to estimate firm propensity to exit. The unobserved individual productivity of a firm is first estimated using the Ackerberg et al. (2006) approach and then introduced as a determinant of firm exit in conjunction with other variables that may serve as barriers to exit, including the firm's level of sunk costs and the industry concentration. Using an unbalanced panel of data for 5,849 firms in French food industries from 1996 to 2002, we find a significantly negative relationship between a firm's probability to exit and its individual efficiency and age. In addition to validating these well-known results, we also show that the level of sunk costs may be an important barrier to exit. Ultimately, the relationship between the propensity to exit and the industry level of concentration contains a turning point: the relationship is at first increasing but then becomes decreasing.

Download Info

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
File URL: http://hal.archives-ouvertes.fr/docs/00/93/93/76/PDF/93_2_193-212.pdf
Download Restriction: no

Bibliographic Info

Paper provided by HAL in its series Post-Print with number hal-00939376.

as in new window
Length:
Date of creation: 2012
Date of revision:
Publication status: Published, Revue d'Études en Agriculture et Environnement, 2012, 93, 2, 193-212
Handle: RePEc:hal:journl:hal-00939376

Note: View the original document on HAL open archive server: http://hal.archives-ouvertes.fr/hal-00939376
Contact details of provider:
Web page: http://hal.archives-ouvertes.fr/

Related research

Keywords: firm; productivity; sunk costs; exit; concentration; food industries;

Other versions of this item:

Find related papers by JEL classification:

References

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
as in new window
  1. Dixit, A., 1988. "Entry And Exit Decisions Under Uncertainty," Papers, Princeton, Department of Economics - Financial Research Center 91, Princeton, Department of Economics - Financial Research Center.
  2. Cohen, Wesley M & Levinthal, Daniel A, 1989. "Innovation and Learning: The Two Faces of R&D," Economic Journal, Royal Economic Society, Royal Economic Society, vol. 99(397), pages 569-96, September.
  3. Griliches, Zvi & Regev, Haim, 1995. "Firm productivity in Israeli industry 1979-1988," Journal of Econometrics, Elsevier, Elsevier, vol. 65(1), pages 175-203, January.
  4. Soderbom, Mans & Teal, Francis & Harding, Alan, 2006. "The Determinants of Survival among African Manufacturing Firms," Economic Development and Cultural Change, University of Chicago Press, vol. 54(3), pages 533-55, April.
  5. Richard J. Gilbert., 1988. "Mobility Barriers and the Value of Incumbency," Economics Working Papers, University of California at Berkeley 8895, University of California at Berkeley.
  6. Richard E. Caves, 1998. "Industrial Organization and New Findings on the Turnover and Mobility of Firms," Journal of Economic Literature, American Economic Association, vol. 36(4), pages 1947-1982, December.
  7. Ackerberg, Daniel & Lanier Benkard, C. & Berry, Steven & Pakes, Ariel, 2007. "Econometric Tools for Analyzing Market Outcomes," Handbook of Econometrics, Elsevier, in: J.J. Heckman & E.E. Leamer (ed.), Handbook of Econometrics, edition 1, volume 6, chapter 63 Elsevier.
  8. Barbara Roberts & Steve Thompson, 2003. "Entry and Exit in a Transition Economy: The Case of Poland," Review of Industrial Organization, Springer, Springer, vol. 22(3), pages 225-243, May.
  9. Philippe Aghion & Nick Bloom & Richard Blundell & Rachel Griffith & Peter Howitt, 2005. "Competition and Innovation: An Inverted-U Relationship," The Quarterly Journal of Economics, MIT Press, MIT Press, vol. 120(2), pages 701-728, May.
  10. James Levinsohn & Amil Petrin, 2000. "Estimating Production Functions Using Inputs to Control for Unobservables," NBER Working Papers 7819, National Bureau of Economic Research, Inc.
  11. Fariñas, Jose C. & Ruano, Sonia, 2005. "Firm productivity, heterogeneity, sunk costs and market selection," International Journal of Industrial Organization, Elsevier, Elsevier, vol. 23(7-8), pages 505-534, September.
  12. G. Steven Olley & Ariel Pakes, 1992. "The Dynamics of Productivity in the Telecommunications Equipment Industry," NBER Working Papers 3977, National Bureau of Economic Research, Inc.
  13. Hopenhayn, Hugo A, 1992. "Entry, Exit, and Firm Dynamics in Long Run Equilibrium," Econometrica, Econometric Society, Econometric Society, vol. 60(5), pages 1127-50, September.
  14. James Levinsohn & Amil Petrin, 2003. "Estimating Production Functions Using Inputs to Control for Unobservables," Review of Economic Studies, Oxford University Press, vol. 70(2), pages 317-341.
  15. Jovanovic, Boyan, 1982. "Selection and the Evolution of Industry," Econometrica, Econometric Society, Econometric Society, vol. 50(3), pages 649-70, May.
  16. Lionel Nesta & Flora Bellone & Patrick Musso & Michel Quéré, 2006. "Productivity and Market Selection of French Manufacturing Firms in the Nineties," Sciences Po publications 2006-04, Sciences Po.
  17. Klepper, Steven & Simons, Kenneth L., 2005. "Industry shakeouts and technological change," International Journal of Industrial Organization, Elsevier, Elsevier, vol. 23(1-2), pages 23-43, February.
  18. Gschwandtner, Adelina & Lambson, Val E., 2002. "The effects of sunk costs on entry and exit: evidence from 36 countries," Economics Letters, Elsevier, Elsevier, vol. 77(1), pages 109-115, September.
  19. Ericson, Richard & Pakes, Ariel, 1995. "Markov-Perfect Industry Dynamics: A Framework for Empirical Work," Review of Economic Studies, Wiley Blackwell, Wiley Blackwell, vol. 62(1), pages 53-82, January.
  20. Lambson, Val Eugene & Jensen, Farrell E, 1998. "Sunk Costs and Firm Value Variability: Theory and Evidence," American Economic Review, American Economic Association, American Economic Association, vol. 88(1), pages 307-13, March.
  21. Matthias Almus, 2004. "The Shadow of Death -- An Emperical Analysis of the Pre-Exit Performance of New German Firms," Small Business Economics, Springer, Springer, vol. 23(3), pages 189-201, October.
  22. Jean-Pierre Huiban, 2011. "The spatial demography of new plants: urban creation and rural survival," Small Business Economics, Springer, Springer, vol. 37(1), pages 73-86, July.
  23. Daniel Friedman & Kai Pommerenke & Rajan Lukose & Garret Milam & Bernardo A. Huberman, 2004. "Searching for the Sunk Cost Fallacy," Experimental, EconWPA 0407008, EconWPA.
  24. repec:spo:wpecon:info:hdl:2441/7185 is not listed on IDEAS
  25. Kessides, Ioannis N, 1990. "Market Concentration, Contestability, and Sunk Costs," The Review of Economics and Statistics, MIT Press, vol. 72(4), pages 614-22, November.
  26. Gopinath Munisamy & Pick Daniel & Li Yonghai, 2003. "Concentration and Innovation in the U.S. Food Industries," Journal of Agricultural & Food Industrial Organization, De Gruyter, De Gruyter, vol. 1(1), pages 1-23, August.
  27. Cabral, Luis, 1995. "Sunk Costs, Firm Size and Firm Growth," Journal of Industrial Economics, Wiley Blackwell, Wiley Blackwell, vol. 43(2), pages 161-72, June.
  28. Munisamy Gopinath & Daniel Pick & Yonghai Li, 2004. "An empirical analysis of productivity growth and industrial concentration in us manufacturing," Applied Economics, Taylor & Francis Journals, Taylor & Francis Journals, vol. 36(1), pages 1-7.
  29. Kessides, Ioannis N. & Tang, Li, 2011. "Sunk costs, market contestability, and the size distribution of firms," Policy Research Working Paper Series 5540, The World Bank.
  30. Werner Holzl, 2005. "Tangible and intangible sunk costs and the entry and exit of firms in a small open economy: the case of Austria," Applied Economics, Taylor & Francis Journals, Taylor & Francis Journals, vol. 37(21), pages 2429-2443.
  31. Eric Bartelsman & Stefano Scarpetta & Fabiano Schivardi, 2005. "Comparative analysis of firm demographics and survival: evidence from micro-level sources in OECD countries," Industrial and Corporate Change, Oxford University Press, vol. 14(3), pages 365-391, June.
  32. Georgios Fotopoulos & Nigel Spence, 1998. "Entry and exit from manufacturing industries: symmetry, turbulence and simultaneity - some empirical evidence from Greek manufacturing industries, 1982-1988," Applied Economics, Taylor & Francis Journals, Taylor & Francis Journals, vol. 30(2), pages 245-262, February.
  33. Jonathan O'Brien & Timothy Folta, 2009. "Sunk costs, uncertainty and market exit: A real options perspective," Industrial and Corporate Change, Oxford University Press, vol. 18(5), pages 807-833, October.
  34. Audretsch, David B, 1991. "New-Firm Survival and the Technological Regime," The Review of Economics and Statistics, MIT Press, vol. 73(3), pages 441-50, August.
  35. Klepper, Steven & Miller, John H., 1995. "Entry, exit, and shakeouts in the United States in new manufactured products," International Journal of Industrial Organization, Elsevier, Elsevier, vol. 13(4), pages 567-591, December.
  36. Frazer, Garth, 2005. "Which Firms Die? A Look at Manufacturing Firm Exit in Ghana," Economic Development and Cultural Change, University of Chicago Press, vol. 53(3), pages 585-617, April.
  37. Shiferaw, Admasu, 2009. "Survival of Private Sector Manufacturing Establishments in Africa: The Role of Productivity and Ownership," World Development, Elsevier, Elsevier, vol. 37(3), pages 572-584, March.
  38. Roberts, Mark J & Tybout, James R, 1997. "The Decision to Export in Colombia: An Empirical Model of Entry with Sunk Costs," American Economic Review, American Economic Association, American Economic Association, vol. 87(4), pages 545-64, September.
  39. Ackerberg, Daniel & Caves, Kevin & Frazer, Garth, 2006. "Structural identification of production functions," MPRA Paper 38349, University Library of Munich, Germany.
  40. Dimara, Efthalia & Skuras, Dimitris & Tsekouras, Kostas & Tzelepis, Dimitris, 2008. "Productive efficiency and firm exit in the food sector," Food Policy, Elsevier, Elsevier, vol. 33(2), pages 185-196, April.
Full references (including those not matched with items on IDEAS)

Citations

Lists

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

Statistics

Access and download statistics

Corrections

When requesting a correction, please mention this item's handle: RePEc:hal:journl:hal-00939376. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (CCSD).

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.