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Entry, Exit and Investment-Specific Technical Change

  • Roberto M. Samaniego


    (Department of Economics, George Washington University)

Across industries, this paper finds that the rate of investment-specific technical change (ISTC) is positively related to rates of entry and exit. This finding is consistent with industry dynamics along the balanced growth path of a general equilibrium, multi-industry model of the plant lifecycle, in which technology adoption is costly and the rate of ISTC varies across industries. Results are robust to allowing for structural change induced by technological progress. The model also generates lumpy investment as a result of technology adoption by incumbents.

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Paper provided by Penn Institute for Economic Research, Department of Economics, University of Pennsylvania in its series PIER Working Paper Archive with number 08-013.

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Length: 49 pages
Date of creation: 02 Apr 2008
Date of revision:
Handle: RePEc:pen:papers:08-013
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