Market Concentration and Business Survival in Static v Dynamic Industries
AbstractWe propose that the effect of market concentration on firm survival is different according to whether an industry is static (low entry and exit) or dynamic. In our empirical analysis we find support for this hypothesis. Industry concentration rates reduce the survival of new plants but only in markets marked by low entry and exit rates. Specifically, a 10 percent increase in the 5-firm concentration ratio in a dynamic market raises the survival rate of new ventures by approximately 2 percent. Our results have implications for the antitrust/competition law indicating less need for regulation of dominant firms in dynamic industries characterized by high entry and exit rates. We use a unique dataset comprising the population of new ventures that enter the UK market in 1998
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Bibliographic InfoPaper provided by Kiel Institute for the World Economy in its series Kiel Working Papers with number 1517.
Length: 30 pages
Date of creation: May 2009
Date of revision:
new firms; start-ups; survival; dynamism; competition policy; industry concentration;
Find related papers by JEL classification:
- L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
- L25 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Performance
- M13 - Business Administration and Business Economics; Marketing; Accounting - - Business Administration - - - New Firms; Startups
- M40 - Business Administration and Business Economics; Marketing; Accounting - - Accounting - - - General
This paper has been announced in the following NEP Reports:
- NEP-ALL-2009-05-16 (All new papers)
- NEP-BEC-2009-05-16 (Business Economics)
- NEP-COM-2009-05-16 (Industrial Competition)
- NEP-ENT-2009-05-16 (Entrepreneurship)
- NEP-MIC-2009-05-16 (Microeconomics)
- NEP-REG-2009-05-16 (Regulation)
- NEP-TID-2009-05-16 (Technology & Industrial Dynamics)
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