A Gap for Me: Entrepreneurs and Entry
We present a theory of entrepreneurial entry and exit decisions. Knowing their own managerial talent, entrepreneurs decide which market to enter, where markets differ in size. We obtain a striking sorting result: each entrant in a large market is more efficient than any entrepreneur in a smaller market. The result obtains since competition is endogenously more intense in larger markets. The sorting and price competition effects imply that the number of entrants (and hence product variety) may actually be smaller in larger markets. In the stochastic dynamic extension of the model, we show that the churning rate of entrepreneurs is higher in larger markets.
|Date of creation:||30 Jun 2003|
|Date of revision:|
|Contact details of provider:|| Postal: 3718 Locust Walk, Philadelphia, PA 19104|
Web page: http://economics.sas.upenn.edu/pier
More information through EDIRC
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Andrew B. Bernard & J. Bradford Jensen, 1997.
"Exceptional Exporter Performance: Cause, Effect, or Both?,"
NBER Working Papers
6272, National Bureau of Economic Research, Inc.
- Bernard, Andrew B. & Bradford Jensen, J., 1999. "Exceptional exporter performance: cause, effect, or both?," Journal of International Economics, Elsevier, vol. 47(1), pages 1-25, February.
- Bernard, A., 1997. "Exceptional Exporter Performance: Cause, Effect, or Both?," Working papers 97-21, Massachusetts Institute of Technology (MIT), Department of Economics.
- Paul F. Whiteley (ed.), 1998. "Economic Policy," Books, Edward Elgar Publishing, volume 0, number 996, June.
- Richard E. Baldwin & Frederic Robert-Nicoud, 2000. "Free trade agreements without delocation," Canadian Journal of Economics, Canadian Economics Association, vol. 33(3), pages 766-786, August.
- Pierre-Philippe Combes & Gilles Duranton & Laurent Gobillon, 2008.
"Spatial Wage Disparities: Sorting Matters!,"
- Davis, Donald R. & Weinstein, David E., 2003.
"Market Size, Linkages, and Productivity: A Study Of Japanese Regions,"
Working Paper Series
UNU-WIDER Research Paper , World Institute for Development Economic Research (UNU-WIDER).
- Donald R. Davis & David E. Weinstein, 2001. "Market Size, Linkages, and Productivity: A Study of Japanese Regions," NBER Working Papers 8518, National Bureau of Economic Research, Inc.
- Leo Sveikauskas, 1975. "The Productivity of Cities," The Quarterly Journal of Economics, Oxford University Press, vol. 89(3), pages 393-413.
- Eric J. Bartelsman & Mark Doms, 2000.
"Understanding productivity: lessons from longitudinal microdata,"
Finance and Economics Discussion Series
2000-19, Board of Governors of the Federal Reserve System (U.S.).
- Mark Doms & Eric J. Bartelsman, 2000. "Understanding Productivity: Lessons from Longitudinal Microdata," Journal of Economic Literature, American Economic Association, vol. 38(3), pages 569-594, September.
- Chad Syverson, 2004.
"Market Structure and Productivity: A Concrete Example,"
Journal of Political Economy,
University of Chicago Press, vol. 112(6), pages 1181-1222, December.
- Chad Syverson, 2004. "Market Structure and Productivity: A Concrete Example," NBER Working Papers 10501, National Bureau of Economic Research, Inc.
- Chad Syverson, 2001. "Market Structure and Productivity: A Concrete Example," Working Papers 01-06, Center for Economic Studies, U.S. Census Bureau.
- Evans, David S & Jovanovic, Boyan, 1989. "An Estimated Model of Entrepreneurial Choice under Liquidity Constraints," Journal of Political Economy, University of Chicago Press, vol. 97(4), pages 808-27, August.
- Richard Ericson & Ariel Pakes, 1995. "Markov-Perfect Industry Dynamics: A Framework for Empirical Work," Review of Economic Studies, Oxford University Press, vol. 62(1), pages 53-82.
- Henderson, J. Vernon, 1986. "Efficiency of resource usage and city size," Journal of Urban Economics, Elsevier, vol. 19(1), pages 47-70, January.
- Lambson, V.E., 1989. "Industry Evolution With Sunk Costs And Uncertian Market Conditions," Working papers 8904, Wisconsin Madison - Social Systems.
- Jovanovic, Boyan, 1982. "Selection and the Evolution of Industry," Econometrica, Econometric Society, vol. 50(3), pages 649-70, May.
- Holmes, T.J. & Schmitz, J.A., 1988.
"A Theory Of Enterpreneurship And Its Application To The Study Of Business Transfers,"
8827, Wisconsin Madison - Social Systems.
- Holmes, Thomas J & Schmitz, James A, Jr, 1990. "A Theory of Entrepreneurship and Its Application to the Study of Business Transfers," Journal of Political Economy, University of Chicago Press, vol. 98(2), pages 265-94, April.
- Davis, Steven J. & Haltiwanger, John, 1999. "Gross job flows," Handbook of Labor Economics, in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 3, chapter 41, pages 2711-2805 Elsevier.
- Khan, M. Ali & Sun, Yeneng, 1995. "Extremal structures and symmetric equilibria with countable actions," Journal of Mathematical Economics, Elsevier, vol. 24(3), pages 239-248.
- Asplund, Björn Marcus & Nocke, Volker, 2000. "Imperfect Competition, Market Size and Firm Turnover," CEPR Discussion Papers 2625, C.E.P.R. Discussion Papers.
- Volker Nocke, 2000. "Monopolisation and Industry Structure," Econometric Society World Congress 2000 Contributed Papers 0429, Econometric Society.
- Hopenhayn, Hugo A, 1992. "Entry, Exit, and Firm Dynamics in Long Run Equilibrium," Econometrica, Econometric Society, vol. 60(5), pages 1127-50, September.
When requesting a correction, please mention this item's handle: RePEc:pen:papers:03-019. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Dolly Guarini)
If references are entirely missing, you can add them using this form.