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Productivity and Market Selection of French Manufacturing Firms in the Nineties

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  • Lionel Nesta

    (OFCE)

  • 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)

Abstract

This paper analyses post-entry and pre-exit performance of French firms using a dataset covering 14 manufacturing industries over the period 1990-2002. The main focus is on market selection mechanisms looking at total factor productivity levels of entrants and exitors relative to incumbent firms. Entrants are found to outperform incumbents, while exitors are less efficient than their surviving counterparts. We nonetheless found key distinguishable features of exit patterns between young and mature firms. Young exiting firms do not display productivity disadvantage relative to incumbent firms. By contrast, mature exiting firms display large and persistent productivity disadvantage relative to their surviving counterparts (shadow of death effect). The determinants of exit differ for entrants and incumbents. Productive inefficiency is a key determinant of the exit of mature firms but not entrants.

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Bibliographic Info

Paper provided by Sciences Po in its series Sciences Po publications with number 2006-04.

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Date of creation: Feb 2006
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Handle: RePEc:spo:wpmain:info:hdl:2441/7186

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Keywords: entry and exit patterns; firm level data; TFP indexes; market selection;

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References

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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," Sciences Po publications info:hdl:2441/3201, Sciences Po.
  2. Bontemps, Christophe & Bouamra-Mechemache, Zohra & Simioni, Michel, 2012. "Quality Labels and Firm Survival in the French Cheese Industry," TSE Working Papers, Toulouse School of Economics (TSE) 12-335, Toulouse School of Economics (TSE).
  3. Daniel Fackler & Claus Schnabel & Joachim Wagner, 2012. "Lingering illness or sudden death? Pre-exit employment developments in German establishments," Working Paper Series in Economics, University of Lüneburg, Institute of Economics 258, University of Lüneburg, Institute of Economics.
  4. Daniel Fackler & Claus Schnabel & Joachim Wagner, 2013. "Establishment exits in Germany: the role of size and age," Small Business Economics, Springer, Springer, vol. 41(3), pages 683-700, October.
  5. 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.
  6. Pierre Blanchard & Jean-Pierre Huiban & Claude Mathieu, 2012. "The determinants of firm exit in the French food industries," Review of Agricultural and Environmental Studies - Revue d'Etudes en Agriculture et Environnement, INRA Department of Economics, INRA Department of Economics, vol. 93(2), pages 193-212.
  7. 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.
  8. 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..
  9. 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.
  10. repec:spo:wpecon:info:hdl:2441/3201 is not listed on IDEAS

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