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The dynamics of entry and exit in turkish manufacturing industry

Author

Listed:
  • Secil Kaya

    () (Department of Economics, METU)

  • Yesim Üçdogruk

    () (Department of Economics, METU)

Abstract

Entry and exit are crucial elements of market selection process which leads to the restructuring, adaptation and evolution of an industry. While the importance of entry and exit has been recognised, attention has focused almost exclusively on quantifying barriers to them, rather than on investigating the determinants of entry and exit and measuring the magnitude of these processes. This paper analyses the entry and exit dynamics of Turkish manufacturing industry defined at the 4-digit ISIC level for the period 1981-1997. While, on the one hand, inflation targeting focuses on the determinants of entry and exit and their sectoral variation, on the other hand, inflation targeting verifies the link between entry and exit. This paper employs a dynamic panel data estimation procedure to investigate the relationship between entry and exit and to estimate the models of entry and exit. Our empirical findings suggest that rates of entry and exit are determined by profit margin, growth rate of output, concentration ratio, labor productivity, average wage rate, advertisement intensity, capital intensity and wage and productivity differentials as explanatory variables.

Suggested Citation

  • Secil Kaya & Yesim Üçdogruk, 2002. "The dynamics of entry and exit in turkish manufacturing industry," ERC Working Papers 0202, ERC - Economic Research Center, Middle East Technical University, revised Feb 2002.
  • Handle: RePEc:met:wpaper:0202
    as

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    File URL: http://www.erc.metu.edu.tr/menu/series02/0202.pdf
    File Function: First version, 2002
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    References listed on IDEAS

    as
    1. Shapiro, Daniel & Khemani, R. S., 1987. "The determinants of entry and exit reconsidered," International Journal of Industrial Organization, Elsevier, vol. 5(1), pages 15-26, March.
    2. Audretsch, David B. & Mata, Jose, 1995. "The post-entry performance of firms: Introduction," International Journal of Industrial Organization, Elsevier, vol. 13(4), pages 413-419, December.
    3. Gibson, John K & Harris, Richard I D, 1996. "Trade Liberalisation and Plant Exit in New Zealand Manufacturing," The Review of Economics and Statistics, MIT Press, vol. 78(3), pages 521-529, August.
    4. Richard Disney & Jonathan Haskel & Ylva Heden, 2003. "Entry, Exit and Establishment Survival in UK Manufacturing," Journal of Industrial Economics, Wiley Blackwell, vol. 51(1), pages 91-112, March.
    5. Pekka Ilmakunnas & Jukka Topi, 1999. "Microeconomic and Macroeconomic Influences on Entry and Exit of Firms," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 15(3), pages 283-301, November.
    6. Acs, Zoltan J & Audretsch, David B, 1989. "Small-Firm Entry in U.S. Manufacturing," Economica, London School of Economics and Political Science, vol. 56(222), pages 255-265, May.
    7. Carree, M. A. & Thurik, A. R., 1999. "The carrying capacity and entry and exit flows in retailing," International Journal of Industrial Organization, Elsevier, vol. 17(7), pages 985-1007, October.
    8. Fotopoulos, Georgios & Spence, Nigel, 1998. "Accounting for Net Entry into Greek Manufacturing by Establishments of Varying Size," Small Business Economics, Springer, vol. 11(2), pages 125-144, September.
    9. Geroski, P. A., 1995. "What do we know about entry?," International Journal of Industrial Organization, Elsevier, vol. 13(4), pages 421-440, December.
    10. Boeri, Tito & Bellmann, Lutz, 1995. "Post-entry behaviour and the cycle: Evidence from Germany," International Journal of Industrial Organization, Elsevier, vol. 13(4), pages 483-500, December.
    11. Fotopoulos, Georgios & Spence, Nigel, 1999. "Net entry behaviour in Greek manufacturing: consumer, intermediate and capital goods industries," International Journal of Industrial Organization, Elsevier, vol. 17(8), pages 1219-1230, November.
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    Cited by:

    1. Limão, Nuno & Tovar, Patricia, 2011. "Policy choice: Theory and evidence from commitment via international trade agreements," Journal of International Economics, Elsevier, vol. 85(2), pages 186-205.
    2. repec:ebl:ecbull:v:12:y:2006:i:11:p:1-12 is not listed on IDEAS

    More about this item

    Keywords

    Industrial dynamics; entry; exit; manufacturing; dynamic panel data;

    JEL classification:

    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms

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