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Productivity and market selection of french manufacturing firms in the nineties

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Author Info

  • Flora Bellone

    (Groupe de Recherche en Droit, Economie et Gestion)

  • Patrick Musso

    (Groupe de Recherche en Droit, Economie et Gestion)

  • Michel Quéré

    (Groupe de Recherche en Droit, Economie et Gestion)

  • Lionel Nesta

    (OFCE)

Abstract

In this paper, we analyse post-entry and pre-exit performance of French manufacturing firms using a dataset covering 14 industries over the period 1990-2002. Our purpose is to shed light on the working of market selection mechanisms within French manufacturing industries. We found that market selection in France rightly operates in favour of more productive firms, but displays some potential inefficiency in selecting more severely new firms compared to mature firms. This claim is based on three results. First, on average, young firms fail to survive when they are faced with a small productivity disadvantage with respect to incumbents. By contrast, mature firms exit the market only when they are confronted by a large, persistent, and increasing productivity gap with their surviving counterparts. Second, we show that successful entrants do not easily catch up to the average size of the industry despite the fact that they exhibit significant TFP and profitability advantages over incumbents. This reveals the existence of barriers to growth for young firms. Thirdly, we show that, on the whole, productivity improvements due to market selection mechanisms within French manufacturing industries are primarily due to market share reallocation across incumbents and that the net entry effect is weak relative to the findings for other industrialised countries.

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Paper provided by Sciences Po in its series Sciences Po publications with number info:hdl:2441/7185.

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Date of creation: Jun 2006
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Publication status: Published in Revue de l'OFCE, 2006, pp.319-349
Handle: RePEc:spo:wpmain:info:hdl:2441/7185

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Keywords: Entry Exit Patterns; Total Factor Productivity; France; Firm-level data;

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Citations

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Cited by:
  1. Guillaume Daudin & Jean-Luc Gaffard & Francesco Saraceno, 2007. "Ordre et désordre dans l'échange international. Une revue de littérature," Revue de l'OFCE, Presses de Sciences-Po, Presses de Sciences-Po, vol. 100(1), pages 143-174.
  2. Bontemps, Christophe & Bouamra-Mechemache, Zohra & Simioni, Michel, 2012. "Quality Labels and Firm Survival in the French Cheese Industry," IDEI Working Papers, Institut d'Économie Industrielle (IDEI), Toulouse 741, Institut d'Économie Industrielle (IDEI), Toulouse.
  3. Carlos Carreira & Paulino Teixeira, 2011. "The shadow of death: analysing the pre-exit productivity of Portuguese manufacturing firms," Small Business Economics, Springer, Springer, vol. 36(3), pages 337-351, April.
  4. Fackler, Daniel & Schnabel, Claus & Wagner, Joachim, 2012. "Establishment Exits in Germany: The Role of Size and Age," IZA Discussion Papers 6349, Institute for the Study of Labor (IZA).
  5. Fackler, Daniel & Schnabel, Claus & Wagner, Joachim, 2012. "Lingering Illness or Sudden Death? Pre-Exit Employment Developments in German Establishments," IZA Discussion Papers 7081, Institute for the Study of Labor (IZA).
  6. repec:spo:wpecon:info:hdl:2441/3201 is not listed on IDEAS
  7. Blanchard, Pierre & Huiban, Jean-Pierre & Mathieu, Claude, 2011. "Productivity, sunk costs and firm exit in the French food industry," 2011 International Congress, August 30-September 2, 2011, Zurich, Switzerland, European Association of Agricultural Economists 114526, European Association of Agricultural Economists.
  8. Pierre Blanchard & Jean Pierre Huiban & Claude Mathieu, 2012. "The determinants of firm exit in the French food industries," Working Papers 167136, Institut National de la Recherche Agronomique, France.
  9. Tran Quoc Trung & Nguyen Thanh Tung & Tran Duy Dong & Phan Hoai Duong, 2008. "Performance of export-oriented small and medium-sized manufacturing enterprises in Viet Nam," Working Papers, Asia-Pacific Research and Training Network on Trade (ARTNeT), an initiative of UNESCAP and IDRC, Canada. 5408, Asia-Pacific Research and Training Network on Trade (ARTNeT), an initiative of UNESCAP and IDRC, Canada..
  10. Bontemps, Christophe & Bouamra-Mechemache, Zohra & Simioni, Michel, 2011. "Quality Labels and Firm Survival in the Food Industry," 2011 International Congress, August 30-September 2, 2011, Zurich, Switzerland, European Association of Agricultural Economists 114263, European Association of Agricultural Economists.

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