Entry and Exit in Dutch Manufacturing Industries

The purpose of this paper is to analyse entry and exit of establishments in 71 3-digit industries in Dutch manufacturing between 1986 and 1990. A distinction is made between existing firm entry and new firm entry and between general exit and exit by bankruptcy. The incentive effect of profitability...

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Bibliographic Details
Published in:Review of industrial organization 1996-06, Vol.11 (3), p.375-382
Main Authors: KLEIJWEG, AAD J.M., LEVER, MARCEL H.C.
Format: Article
Language:English
Subjects:
Bank capital
Bankruptcy
Barriers to entry
Business structures
Capital depreciation
Capital intensive industries
Industrial economics
Industry
Manufacturing
Manufacturing industries
Market entry
Netherlands
Profitable firms
Sunk costs
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Summary:The purpose of this paper is to analyse entry and exit of establishments in 71 3-digit industries in Dutch manufacturing between 1986 and 1990. A distinction is made between existing firm entry and new firm entry and between general exit and exit by bankruptcy. The incentive effect of profitability and the barrier effect of capital intensity and advertising intensity appear to be stronger for new firm entry than for existing firm entry. Growth and capital intensity turn out to reduce exit by bankruptcy, whereas R&D intensity reduces general exit. The positive impact of general exit on new firm entry and vice versa points to replacement and displacement.
ISSN:0889-938X
1573-7160
DOI:10.1007/BF00414405