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A structural model of firm and industry evolution: Evidence from Chile

  • Şeker, Murat

Although there are many models that yield a simple interpretation of the basic features of firm and industry evolution, they are too stylized to confront the micro-level data in a formal quantitative analysis. By introducing heterogeneity to a stylized industry evolution model, I explain several novel features of the data, such as the shape of the size distribution and the relationships between age, size, and the hazard rate of exit. In the model, heterogeneity arises through a combination of exogenous efficiency differences and accumulated innovations resulting from R&D investments. Integrating these forces allows the model to perform well quantitatively in fitting data on Chilean manufacturers.

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Article provided by Elsevier in its journal Journal of Economic Dynamics and Control.

Volume (Year): 36 (2012)
Issue (Month): 6 ()
Pages: 891-913

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Handle: RePEc:eee:dyncon:v:36:y:2012:i:6:p:891-913
DOI: 10.1016/j.jedc.2012.01.007
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