This article investigates the determinants of entry and exit in the Austrian manufacturing sector based on 1981 to 1994 data. We study the response of entry, exit and other indicators of firm dynamics to changes in average plant size, size heterogeneity, concentration, incentives and vertical integration. By applying Bayesian simulation methods we estimate random coefficient models and study the symmetry of the determinants of entry and exit. Our empirical analysis shows that entry and exit rates are driven by the same determinants. The impacts of these determinates are nearly homogeneous for both, entry rates and exits rates, respectively. Moreover, we find (i) that changes in average plant size, size heterogeneity and concentration are not symmetric with respect to entry and exit, (ii) that changes in the growth of sales is weakly symmetric and (iii) that the growth rate of employment is strongly asymmetric across industries in Austrian manufacturing. Furthermore, we infer from the data that the turnover of firms influences the changes in the number of competitors. Low entry rates go hand in hand with low net entryrates and a low turnover.
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Paper provided by Vienna University of Economics and B.A. Research Group: Growth and Employment in Europe: Sustainability and Competitiveness in its series Working Papers with number
geewp36.
Find related papers by JEL classification: C2 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables J2 - Labor and Demographic Economics - - Demand and Supply of Labor M13 - Business Administration and Business Economics; Marketing; Accounting - - Business Administration - - - New Firms; Startups
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Pashigian, Peter, 1969.
"The Effect of Market Size on Concentration,"
International Economic Review,
Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 10(3), pages 291-314, October.
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