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The dynamics of entry and exit in turkish manufacturing industry

Author

Listed:
  • Secil Kaya

    (Department of Economics, METU)

  • Yesim Üçdogruk

    (Department of Economics, METU)

Abstract

Entry and exit are crucial elements of market selection process which leads to the restructuring, adaptation and evolution of an industry. While the importance of entry and exit has been recognised, attention has focused almost exclusively on quantifying barriers to them, rather than on investigating the determinants of entry and exit and measuring the magnitude of these processes. This paper analyses the entry and exit dynamics of Turkish manufacturing industry defined at the 4-digit ISIC level for the period 1981-1997. While, on the one hand, inflation targeting focuses on the determinants of entry and exit and their sectoral variation, on the other hand, inflation targeting verifies the link between entry and exit. This paper employs a dynamic panel data estimation procedure to investigate the relationship between entry and exit and to estimate the models of entry and exit. Our empirical findings suggest that rates of entry and exit are determined by profit margin, growth rate of output, concentration ratio, labor productivity, average wage rate, advertisement intensity, capital intensity and wage and productivity differentials as explanatory variables.

Suggested Citation

  • Secil Kaya & Yesim Üçdogruk, 2002. "The dynamics of entry and exit in turkish manufacturing industry," ERC Working Papers 0202, ERC - Economic Research Center, Middle East Technical University, revised Feb 2002.
    • Handle: RePEc:met:wpaper:0202
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    File URL: http://erc.metu.edu.tr/en/system/files/menu/series02/0202.pdf
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    References listed on IDEAS

    as
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    More about this item

    Keywords

    Industrial dynamics; entry; exit; manufacturing; dynamic panel data;
    All these keywords.

    JEL classification:

    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms

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