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The impacts of technological change, industry structure and Plant entry/exit on industry efficiency growth

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  • raies, asma

Abstract

In this paper, we provide a theoretical framework combining both the theory of adoption and industry evolution to explore the different sources of industry efficiency growth. The objective is to investigate which of the explanatory variables can explain inefficiency. The theoretical and simulation results of this study show that the inter-firms efficiency variance exerts a substantial impact on industry efficiency. Productivity change within individual plant (via adoption and learning) is a major source of efficiency growth in the industry. Exit usually improves aggregate efficiency as less efficient plants leave industries. The impact of entry is less clear since it depends on the efficiency levels of entrants. Finally, the role of competition in generating economic efficiency is strongly confirmed. Our theoretical findings confirm and extend others in the empirical studies.

Suggested Citation

  • raies, asma, 2006. "The impacts of technological change, industry structure and Plant entry/exit on industry efficiency growth," MPRA Paper 9546, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:9546
    as

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    File URL: https://mpra.ub.uni-muenchen.de/9546/1/MPRA_paper_9546.pdf
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    References listed on IDEAS

    as
    1. Jensen, Richard, 1992. "Innovation Adoption and Welfare under Uncertainty," Journal of Industrial Economics, Wiley Blackwell, vol. 40(2), pages 173-180, June.
    2. Martin Neil Baily & Eric J. Bartelsman & John Haltiwanger, 2001. "Labor Productivity: Structural Change And Cyclical Dynamics," The Review of Economics and Statistics, MIT Press, vol. 83(3), pages 420-433, August.
    3. Bee Yan Aw & Xiaomin Chen & Mark J. Roberts, 1997. "Firm-level Evidence on Productivity Differentials, Turnover, and Exports in Taiwanese Manufacturing," NBER Working Papers 6235, National Bureau of Economic Research, Inc.
    4. Lucia Foster & John C. Haltiwanger & C. J. Krizan, 2001. "Aggregate Productivity Growth: Lessons from Microeconomic Evidence," NBER Chapters,in: New Developments in Productivity Analysis, pages 303-372 National Bureau of Economic Research, Inc.
    5. Hopenhayn, Hugo A, 1992. "Entry, Exit, and Firm Dynamics in Long Run Equilibrium," Econometrica, Econometric Society, vol. 60(5), pages 1127-1150, September.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    Technological Change; Industry Structure; Plant Entry/Exit; industry efficiency growth;

    JEL classification:

    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes
    • L22 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Organization and Market Structure
    • O3 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights

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