American Economic Review
ISSN 0002-8282 (Print) | ISSN 1944-7981 (Online)
Entry, Exit, and Investment-Specific Technical Change
American Economic Review
vol. 100,
no. 1, March 2010
(pp. 164–92)
Abstract
Using European data, this paper finds that (i) industry entry and exit rates are positively related to industry rates of investment-specific technical change (ISTC); and (ii) 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 (i) and (ii), provided the cost of technology adoption is increasing in the rate of ISTC. (JEL G31, L11, O31, O33)Citation
Samaniego, Roberto M. 2010. "Entry, Exit, and Investment-Specific Technical Change." American Economic Review, 100 (1): 164–92. DOI: 10.1257/aer.100.1.164Additional Materials
JEL Classification
- G31 Capital Budgeting; Fixed Investment and Inventory Studies
- L11 Production, Pricing, and Market Structure; Size Distribution of Firms
- O31 Innovation and Invention: Processes and Incentives
- O33 Technological Change: Choices and Consequences; Diffusion Processes