Tangible and intangible sunk costs and the entry and exit of firms in Austrian Manufacturing
The present paper provides further evidence on the importance of sunk costs as determinant of the turnover, entry, and exit of firms by studying the Austrian manufacturing industry using a 14-year panel . This study explicitly considers sunk costs related to investment in dedicated intangible assets such as investment relating to organizational and goodwill capital. The empirical results confirm the relevance of sunk costs as mobility barriers, .their symmetry in respect to entry and exit and suggest that the influence of sunk costs is robust to aggregation. Sunk costs relating to capital expenditure and to organizational capital are found to be symmetric. Sunk costs relating to advertising expenditures seem to be only barriers to entry but not mobility barriers. Industry growth and profitability growth are found to be asymmetric, having a positive influence on entry and a negative on exit. Export growth is found to reduce the turnover of firms and to have a negative effect on exit suggesting that the decision to export may be associated with substantial sunk costs.
To our knowledge, this item is not available for
download. To find whether it is available, there are three
1. Check below under "Related research" whether another version of this item is available online.
2. Check on the provider's web page whether it is in fact available.
3. Perform a search for a similarly titled item that would be available.
|Date of creation:||Sep 2003|
|Contact details of provider:|| Postal: Welthandelsplatz 1, 1020 Vienna, Austria|
Web page: http://www.wu.ac.at/economics/en
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.:
- Michael Pfaffermayr, 1999. "Ownership Advantages, Foreign Production and Productivity: Evidence from Austrian Manufacturing Firms," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 15(4), pages 379-396, December.
- Ghosal, Vivek, 2002.
"Impact of Uncertainty and Sunk Costs on Firm Survival and Industry Dynamics,"
Royal Economic Society Annual Conference 2002
86, Royal Economic Society.
- Vivek Ghosal, 2003. "Impact of Uncertainty and Sunk Costs on Firm Survival and Industry Dynamics," CIG Working Papers SP II 2003-12, Wissenschaftszentrum Berlin (WZB), Research Unit: Competition and Innovation (CIG).
- Enrico Santarelli, 2002. "Is subsidizing entry an optimal policy?," Industrial and Corporate Change, Oxford University Press, vol. 11(1), pages 39-52, February.
- Gilbert, Richard J., 1989.
"Mobility barriers and the value of incumbency,"
Handbook of Industrial Organization,in: R. Schmalensee & R. Willig (ed.), Handbook of Industrial Organization, edition 1, volume 1, chapter 8, pages 475-535
- Gilbert, Richard, 1988. "Mobility Barriers and the Value of Incumbency," Department of Economics, Working Paper Series qt52q9j63w, Department of Economics, Institute for Business and Economic Research, UC Berkeley.
- Richard J. Gilbert., 1988. "Mobility Barriers and the Value of Incumbency," Economics Working Papers 8895, University of California at Berkeley.
- 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.
- Barbara Roberts & Steve Thompson, 2003. "Entry and Exit in a Transition Economy: The Case of Poland," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 22(3), pages 225-243, May.
- Gernot Hutschenreiter & Michael Peneder, 1997. "Austria's "Technology Gap" in Foreign Trade," WIFO Monatsberichte (monthly reports), WIFO, vol. 70(2), pages 103-114, February.
- Asplund, Marcus, 2000.
"What Fraction of a Capital Investment Is Sunk Costs?,"
Journal of Industrial Economics,
Wiley Blackwell, vol. 48(3), pages 287-304, September.
- Asplund, Marcus, 1995. "What Fraction of a Capital Investment is Sunk Cost?," SSE/EFI Working Paper Series in Economics and Finance 68, Stockholm School of Economics, revised 24 Sep 1999.
- Malerba, Franco & Orsenigo, Luigi, 1995. "Schumpeterian Patterns of Innovation," Cambridge Journal of Economics, Oxford University Press, vol. 19(1), pages 47-65, February.
- Lambson, Val Eugene & Jensen, Farrell E, 1998. "Sunk Costs and Firm Value Variability: Theory and Evidence," American Economic Review, American Economic Association, vol. 88(1), pages 307-313, March.
- Rosenbaum, David I., 1993. "Profit, entry and changes in concentration," International Journal of Industrial Organization, Elsevier, vol. 11(2), pages 185-203, June.
- Valerie A. Ramey & Matthew D. Shapiro, 2001. "Displaced Capital: A Study of Aerospace Plant Closings," Journal of Political Economy, University of Chicago Press, vol. 109(5), pages 958-992, October.
- Baldwin,John R. & Gorecki,Paul, 1998. "The Dynamics of Industrial Competition," Cambridge Books, Cambridge University Press, number 9780521633574, November.
- Mata, Jose, 1993. "Entry and type of entrant : Evidence from Portugal," International Journal of Industrial Organization, Elsevier, vol. 11(1), pages 101-122, March.
- Winter, Sidney G., 1984. "Schumpeterian competition in alternative technological regimes," Journal of Economic Behavior & Organization, Elsevier, vol. 5(3-4), pages 287-320.
- Louri, H. & Anagnostaki, V., 1995. "Entry and exit from Greek manufacturing industry: a test of the symmetry hypothesis," MPRA Paper 40575, University Library of Munich, Germany.
- Mueller, Dennis C & Supina, Dylan, 2002. "Goodwill Capital," Small Business Economics, Springer, vol. 19(3), pages 233-253, November.
- Bresnahan, Timothy F & Reiss, Peter C, 1991. "Entry and Competition in Concentrated Markets," Journal of Political Economy, University of Chicago Press, vol. 99(5), pages 977-1009, October.
- Lambson, V.E., 1989. "Industry Evolution With Sunk Costs And Uncertian Market Conditions," Working papers 8904, Wisconsin Madison - Social Systems.
- Fotopoulos, Georgios & Spence, Nigel, 1997. "Net Entry of Firms into Greek Manufacturing: The Effects of Business Conditions," Small Business Economics, Springer, vol. 9(3), pages 239-253, June.
- Andrew Atkeson & Patrick J. Kehoe, 2002. "Measuring Organization Capital," NBER Working Papers 8722, National Bureau of Economic Research, Inc.
- 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.
- Ilmakunnas, Pekka & Topi, Jukka, 1996. "Microeconomic and macroeconomic influences of entry and exit of firms," Research Discussion Papers 6/1996, Bank of Finland.
- Geroski, P. A., 1995. "What do we know about entry?," International Journal of Industrial Organization, Elsevier, vol. 13(4), pages 421-440, December.
- Fudenberg, Drew & Gilbert, Richard & Stiglitz, Joseph & Tirole, Jean, 1983. "Preemption, leapfrogging and competition in patent races," European Economic Review, Elsevier, vol. 22(1), pages 3-31, June.
- Roberts, Mark J & Tybout, James R, 1997. "The Decision to Export in Colombia: An Empirical Model of Entry with Sunk Costs," American Economic Review, American Economic Association, vol. 87(4), pages 545-564, September.
- M. A. Adelman, 1955. "Concept and Statistical Measurement of Vertical Integration," NBER Chapters,in: Business Concentration and Price Policy, pages 281-330 National Bureau of Economic Research, Inc.
- Jovanovic, Boyan, 1982. "Selection and the Evolution of Industry," Econometrica, Econometric Society, vol. 50(3), pages 649-670, May.
- Tucker, Irvin B & Wilder, Ronald P, 1977. "Trends in Vertical Integration in the U.S. Manufacturing Sector," Journal of Industrial Economics, Wiley Blackwell, vol. 26(1), pages 81-94, September.
- Michael Peneder, 2001. "The Austrian Paradox Revisited," WIFO Monatsberichte (monthly reports), WIFO, vol. 74(12), pages 737-748, December.
- Gschwandtner, Adelina & Lambson, Val E., 2002. "The effects of sunk costs on entry and exit: evidence from 36 countries," Economics Letters, Elsevier, vol. 77(1), pages 109-115, September.
- Pashigian, Peter, 1969. "The Effect of Market Size on Concentration," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 10(3), pages 291-314, October.
- Breschi, Stefano & Malerba, Franco & Orsenigo, Luigi, 2000. "Technological Regimes and Schumpeterian Patterns of Innovation," Economic Journal, Royal Economic Society, vol. 110(463), pages 388-410, April.
- Audretsch, David B, 1991. "New-Firm Survival and the Technological Regime," The Review of Economics and Statistics, MIT Press, vol. 73(3), pages 441-450, August.
- Gort, Michael & Klepper, Steven, 1982. "Time Paths in the Diffusion of Product Innovations," Economic Journal, Royal Economic Society, vol. 92(367), pages 630-653, September.
When requesting a correction, please mention this item's handle: RePEc:wiw:wiwgee:geewp33. 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: (Department of Economics)
If references are entirely missing, you can add them using this form.