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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.

Suggested Citation

  • Şeker, Murat, 2012. "A structural model of firm and industry evolution: Evidence from Chile," Journal of Economic Dynamics and Control, Elsevier, vol. 36(6), pages 891-913.
  • 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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    References listed on IDEAS

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    Cited by:

    1. Seker, Murat & Ulu, Mehmet Fatih, 2017. "Effects of Licensing Reform on Firm Innovation: Evidence from India," MPRA Paper 80382, University Library of Munich, Germany.

    More about this item


    Industry evolution; Firm dynamics; Endogenous product scope; Innovation; Parameter estimation;

    JEL classification:

    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
    • L6 - Industrial Organization - - Industry Studies: Manufacturing
    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives
    • C15 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Statistical Simulation Methods: General


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