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Productivity and market selection of french manufacturing firms in the nineties

Author

Listed:
  • Flora Bellone

    (GREDEG - Groupe de Recherche en Droit, Economie et Gestion - UNS - Université Nice Sophia Antipolis (1965 - 2019) - CNRS - Centre National de la Recherche Scientifique)

  • Patrick Musso

    (GREDEG - Groupe de Recherche en Droit, Economie et Gestion - UNS - Université Nice Sophia Antipolis (1965 - 2019) - CNRS - Centre National de la Recherche Scientifique)

  • Michel Quéré

    (GREDEG - Groupe de Recherche en Droit, Economie et Gestion - UNS - Université Nice Sophia Antipolis (1965 - 2019) - CNRS - Centre National de la Recherche Scientifique)

  • Lionel Nesta

    (OFCE - Observatoire français des conjonctures économiques (Sciences Po) - Sciences Po - Sciences Po)

Abstract

In this paper, we analyse post-entry and pre-exit performance of French manufacturing firms using a dataset covering 14 industries over the period 1990-2002. Our purpose is to shed light on the working of market selection mechanisms within French manufacturing industries. We found that market selection in France rightly operates in favour of more productive firms, but displays some potential inefficiency in selecting more severely new firms compared to mature firms. This claim is based on three results. First, on average, young firms fail to survive when they are faced with a small productivity disadvantage with respect to incumbents. By contrast, mature firms exit the market only when they are confronted by a large, persistent, and increasing productivity gap with their surviving counterparts. Second, we show that successful entrants do not easily catch up to the average size of the industry despite the fact that they exhibit significant TFP and profitability advantages over incumbents. This reveals the existence of barriers to growth for young firms. Thirdly, we show that, on the whole, productivity improvements due to market selection mechanisms within French manufacturing industries are primarily due to market share reallocation across incumbents and that the net entry effect is weak relative to the findings for other industrialised countries.

Suggested Citation

  • Flora Bellone & Patrick Musso & Michel Quéré & Lionel Nesta, 2006. "Productivity and market selection of french manufacturing firms in the nineties," SciencePo Working papers Main hal-01021289, HAL.
  • Handle: RePEc:hal:spmain:hal-01021289
    DOI: 10.3917/reof.073.0319
    Note: View the original document on HAL open archive server: https://sciencespo.hal.science/hal-01021289
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    More about this item

    Keywords

    Entry Exit Patterns; Total Factor Productivity; France; Firm-level data;
    All these keywords.

    JEL classification:

    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
    • L60 - Industrial Organization - - Industry Studies: Manufacturing - - - General

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