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Downsizing in German Chemical Manufacturing Industry during the 1990s: Why Small Is Beautiful?

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Listed author(s):
  • Oleg Badunenko

Abstract

German chemical manufacturing industry is marked by two major structural changes during 1992-2004. Firstly, number of firms was ranging extensively: from 676 to 901, while only 96 firms represented balanced panel. Secondly, size of the firm dropped considerably-by 88%. This paper is intended to shed light on both phenomena. Based on reliable census data analysis suggests the former evidence be explained (i) by persistent poor performance of firms and (ii) by so called "general purpose technology" argument. The latter phenomenon was found to be a rational behaviour because numerous firms continually operated under decreasing returns to scale.

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File URL: http://www.diw.de/documents/publikationen/73/diw_01.c.63383.de/dp722.pdf
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Paper provided by DIW Berlin, German Institute for Economic Research in its series Discussion Papers of DIW Berlin with number 722.

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Length: 35 p.
Date of creation: 2007
Handle: RePEc:diw:diwwpp:dp722
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Keywords: DEA; technical and scale efficiency; technological change; firm size; firm level data; chemical manufacturing;

Find related papers by JEL classification:

  • D21 - Microeconomics - - Production and Organizations - - - Firm Behavior: Theory
  • L23 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Organization of Production
  • L25 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Performance
  • L65 - Industrial Organization - - Industry Studies: Manufacturing - - - Chemicals; Rubber; Drugs; Biotechnology; Plastics

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  9. Oulton,Nicholas & O'Mahony,Mary, 1994. "Productivity and Growth," Cambridge Books, Cambridge University Press, number 9780521453455, September.
  10. Alvarez, Roberto & Crespi, Gustavo, 2003. "Determinants of Technical Efficiency in Small Firms," Small Business Economics, Springer, vol. 20(3), pages 233-244, May.
  11. Harald Bathelt, 2000. "Persistent structures in a turbulent world: the division of labor in the German chemical industry," Environment and Planning C: Government and Policy, Pion Ltd, London, vol. 18(2), pages 225-247, April.
  12. Daouia, Abdelaati & Simar, Leopold, 2007. "Nonparametric efficiency analysis: A multivariate conditional quantile approach," Journal of Econometrics, Elsevier, vol. 140(2), pages 375-400, October.
  13. Cazals, Catherine & Florens, Jean-Pierre & Simar, Leopold, 2002. "Nonparametric frontier estimation: a robust approach," Journal of Econometrics, Elsevier, vol. 106(1), pages 1-25, January.
  14. Audretsch, David B & Elston, Julie A, 1997. "Financing the German Mittelstand," Small Business Economics, Springer, vol. 9(2), pages 97-110, April.
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