The impacts of technological change, industry structure and Plant entry/exit on industry efficiency growth
AbstractIn this paper, we provide a theoretical framework combining both the theory of adoption and industry evolution to explore the different sources of industry efficiency growth. The objective is to investigate which of the explanatory variables can explain inefficiency. The theoretical and simulation results of this study show that the inter-firms efficiency variance exerts a substantial impact on industry efficiency. Productivity change within individual plant (via adoption and learning) is a major source of efficiency growth in the industry. Exit usually improves aggregate efficiency as less efficient plants leave industries. The impact of entry is less clear since it depends on the efficiency levels of entrants. Finally, the role of competition in generating economic efficiency is strongly confirmed. Our theoretical findings confirm and extend others in the empirical studies.
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Bibliographic InfoPaper provided by University Library of Munich, Germany in its series MPRA Paper with number 9546.
Date of creation: Dec 2006
Date of revision:
Publication status: Published in The Business Review, Cambridge Number 2.Vol. 6(2006): pp. 1-12
Technological Change; Industry Structure; Plant Entry/Exit; industry efficiency growth;
Find related papers by JEL classification:
- O33 - Economic Development, Technological Change, and Growth - - Technological Change; Research and Development; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes
- L22 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Organization and Market Structure
- O3 - Economic Development, Technological Change, and Growth - - Technological Change; Research and Development; Intellectual Property Rights
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