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Strategy, Scale or Policy? Exit in the Australian Car Industry


  • Fleischmann, Matthew P
  • Prentice, David


This paper estimates the importance of strategy, scale and policy in determining the pattern of exit in the Australian car industry. Previous studies found only a weak role for strategy in exit from declining industries. Using a new dataset and improvements on the specification used in earlier studies, we find evidence that strategy influences the pattern of exit where economies of scale are less important. Protection is also found to negatively influence the likelihood of exit. Copyright 2001 by The Economic Society of Australia.

Suggested Citation

  • Fleischmann, Matthew P & Prentice, David, 2001. "Strategy, Scale or Policy? Exit in the Australian Car Industry," The Economic Record, The Economic Society of Australia, vol. 77(239), pages 351-360, December.
  • Handle: RePEc:bla:ecorec:v:77:y:2001:i:239:p:351-60

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    References listed on IDEAS

    1. Mary E. Deily, 1991. "Exit Strategies and Plant-Closing Decisions: The Case of Steel," RAND Journal of Economics, The RAND Corporation, vol. 22(2), pages 250-263, Summer.
    2. John Sutton, 1997. "Gibrat's Legacy," Journal of Economic Literature, American Economic Association, vol. 35(1), pages 40-59, March.
    3. Deily, Mary E, 1988. "Investment Activity and the Exit Decision," The Review of Economics and Statistics, MIT Press, vol. 70(4), pages 595-602, November.
    4. Peter Stubbs, 1972. "The Australian Motor Industry A Study in Protection and Growth," Australian Economic Review, The University of Melbourne, Melbourne Institute of Applied Economic and Social Research, vol. 5(1), pages 46-46.
    5. Gibson, John K & Harris, Richard I D, 1996. "Trade Liberalisation and Plant Exit in New Zealand Manufacturing," The Review of Economics and Statistics, MIT Press, vol. 78(3), pages 521-529, August.
    6. Robert Conlon & John Perkins, 1997. "Political Economy Of Assistance To The Automotive Industry In Australia: Have We Seen It All Before?," Economic Papers, The Economic Society of Australia, vol. 16(2), pages 76-91, June.
    7. Richard Ericson & Ariel Pakes, 1995. "Markov-Perfect Industry Dynamics: A Framework for Empirical Work," Review of Economic Studies, Oxford University Press, vol. 62(1), pages 53-82.
    8. Pankaj Ghemawat & Barry Nalebuff, 1990. "The Devolution of Declining Industries," The Quarterly Journal of Economics, Oxford University Press, vol. 105(1), pages 167-186.
    9. Jovanovic, Boyan, 1982. "Selection and the Evolution of Industry," Econometrica, Econometric Society, vol. 50(3), pages 649-670, May.
    10. Dierickx, I. & Matutes, C. & Neven, D., 1991. "Cost differences and survival in declining industries : A case for 'picking winners'?," European Economic Review, Elsevier, vol. 35(8), pages 1507-1528, December.
    11. R.M. Conlon & J.A. Perkins, 1995. "Automotive Industry Policy In Australia: Origins, Impact And Prospects," Economic Papers, The Economic Society of Australia, vol. 14(3), pages 49-68, September.
    12. Baden-Fuller, Charles W F, 1989. "Exit from Declining Industries and the Case of Steel Castings," Economic Journal, Royal Economic Society, vol. 99(398), pages 949-961, December.
    13. Richard E. Caves, 1998. "Industrial Organization and New Findings on the Turnover and Mobility of Firms," Journal of Economic Literature, American Economic Association, vol. 36(4), pages 1947-1982, December.
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    Cited by:

    1. Lionel Bopage & Kishor Sharma, 2014. "Liberalization and Structural Change in Australian Automotive Industry: An Analysis of Trade and Productivity Performance: 1962–2008," Global Business Review, International Management Institute, vol. 15(3), pages 447-460, September.
    2. Sanidas, Elias & Jayanthakumaran, Kankesu, 2003. "Trade Reforms and the Survival of the Passenger Motor Vehicle Industry in Australia," Economics Working Papers wp03-10, School of Economics, University of Wollongong, NSW, Australia.
    3. Sanidas, Elias & Jayanthakumaran, Kankesu, 2006. "The Consequences of Trade Liberalisation on the Australian Passenger Motor Vehicle Industry," Economics Working Papers wp06-01, School of Economics, University of Wollongong, NSW, Australia.

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