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The determinants of firm exit in the French food industries

Author

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  • Pierre Blanchard

    (Université Paris Est, ERUDITE, Université Paris Est Créteil, 94010 Créteil, France)

  • Jean-Pierre Huiban

    () (INRA, UR 1303 ALISS, 65 boulevard de Brandebourg, 94205 Ivry-sur Seine cedex, and ERUDITE, Université Paris Est Créteil)

  • Claude Mathieu

    (Université Paris Est, ERUDITE, Université Paris Est Créteil, 94010 Créteil, France)

Abstract

A semi-parametric approach is used to estimate firm propensity to exit. The unobserved individual productivity of a firm is first estimated using the Ackerberg et al. (2006) approach and then introduced as a determinant of firm exit in conjunction with other variables that may serve as barriers to exit, including the firm’s level of sunk costs and the industry concentration. Using an unbalanced panel of data for 5,849 firms in French food industries from 1996 to 2002, we find a significantly negative relationship between a firm’s probability to exit and its individual efficiency and age. In addition to validating these well-known results, we also show that the level of sunk costs may be an important barrier to exit. Ultimately, the relationship between the propensity to exit and the industry level of concentration contains a turning point: the relationship is at first increasing but then becomes decreasing.

Suggested Citation

  • 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, vol. 93(2), pages 193-212.
  • Handle: RePEc:rae:jourae:v:93:y:2012:i:2:p:193-212
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    6. Cabrillac, B. & Gauvin, L. & Gossé, L., 2016. "Les obligations indexées sur le PIB : quels bénéfices pour les émetteurs, les investisseurs et la stabilité financière internationale ?," Bulletin de la Banque de France, Banque de France, issue 208, pages 5-20.
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    8. Geoffroy Enjolras & Magali Aubert, 2014. "Le mode de commercialisation est-il une échappatoire pour les exploitations en difficulté financière ?," Post-Print hal-02047868, HAL.
    9. Paula Sarmento & Rosa Forte, 2019. "Does Foreign Presence Induce Host Country Firms’ Exit? The Case of Portugal," International Advances in Economic Research, Springer;International Atlantic Economic Society, vol. 25(3), pages 323-337, August.
    10. Geoffroy Enjolras & Philippe Madiès, 2020. "The role of bank analysts and scores in the prediction of financial distress: Evidence from French farms," Economics Bulletin, AccessEcon, vol. 40(4), pages 2978-2993.
    11. Carl Gaigné & Bruno Larue, 2016. "Public quality standards and the food industry’s structure in a global economy," Review of Agricultural, Food and Environmental Studies, Springer, vol. 97(2), pages 141-148, September.
    12. Bureau, B. & Libert, T., 2016. "Enjeux économiques des défaillances d’entreprises en France," Bulletin de la Banque de France, Banque de France, issue 208, pages 55-63.
    13. Dongmei Tu & Yao Li & Yong Zeng, 2019. "The Effects Of Environmental Regulation On Exporters’ Exiting Behavior: The Evidence From China," The Singapore Economic Review (SER), World Scientific Publishing Co. Pte. Ltd., vol. 64(02), pages 301-321, March.
    14. Redha Fares & Amélie Guillin & Claude Mathieu, 2020. "Failing and exporting firms: a paradox?," Erudite Working Paper 2020-08, Erudite.
    15. Carl Gaigné & Bertrand Schmitt & Patrick Sevestre & Michel Simioni, 2016. "Editorial to the special issue in memory of Jean-Pierre Huiban," Review of Agricultural, Food and Environmental Studies, Springer, vol. 97(2), pages 85-87, September.
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    17. Boileau, A. & Carlino, L. & Lafon, A.-S., 2016. "Au premier semestre 2016, les principaux groupes français renforcent leur profitabilité," Bulletin de la Banque de France, Banque de France, issue 208, pages 43-54.
    18. Coffinet, J. & Jadeau, C. & Perillaud, S., 2016. "Tendances récentes du crédit à la consommation," Bulletin de la Banque de France, Banque de France, issue 208, pages 29-41.

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    More about this item

    Keywords

    firm; productivity; sunk costs; exit; concentration; food industries;
    All these keywords.

    JEL classification:

    • C33 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Models with Panel Data; Spatio-temporal Models
    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
    • L25 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Performance
    • L66 - Industrial Organization - - Industry Studies: Manufacturing - - - Food; Beverages; Cosmetics; Tobacco

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