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Entry, Exit and Investment-Specific Technical Change, Second Version

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  • Roberto M. Samaniego

    (Department of Economics, George Washington University)

Abstract

Using European data, this paper finds that (1) industry entry and exit rates are positively related to industry rates of investment-specific technical change (ISTC); (2) the sensitivity of industry entry and exit rates to cross-country differences in entry costs depends on industry rates of ISTC. The paper constructs a general equilibrium model in which the rate of ISTC varies across industries and new investment-specific technologies can be introduced by entrants or by incumbents. In the calibrated model, equilibrium behavior is consistent with stylized facts (1) and (2), provided the cost of technology adoption is increasing in the rate of ISTC.

Suggested Citation

  • Roberto M. Samaniego, 2008. "Entry, Exit and Investment-Specific Technical Change, Second Version," PIER Working Paper Archive 09-020, Penn Institute for Economic Research, Department of Economics, University of Pennsylvania, revised 08 Dec 2008.
    • Handle: RePEc:pen:papers:09-020
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    References listed on IDEAS

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    More about this item

    Keywords

    Entry; exit; turnover; investment-specific technical change; entry costs; vintage capital; embodied technical change; lumpy investment;
    All these keywords.

    JEL classification:

    • D92 - Microeconomics - - Micro-Based Behavioral Economics - - - Intertemporal Firm Choice, Investment, Capacity, and Financing
    • L26 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Entrepreneurship
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes
    • O41 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - One, Two, and Multisector Growth Models

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