The Slow Growth of New Plants: Learning about Demand?

Lucia Foster, John Haltiwanger and Chad Syverson

No 17853, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: It is well known that new businesses are typically much smaller than their established industry competitors, and that this size gap closes slowly. We show that even in commodity-like product markets, these patterns do not reflect productivity gaps, but rather differences in demand-side fundamentals. We document and explore patterns in plants' idiosyncratic demand levels by estimating a dynamic model of plant expansion in the presence of a demand accumulation process (e.g., building a customer base). We find active accumulation driven by plants' past production decisions quantitatively dominates passive demand accumulation, and that within-firm spillovers affect demand levels but not growth.

JEL-codes: D2 E23 L1 L6 (search for similar items in EconPapers)
Date: 2012-02
New Economics Papers: this item is included in nep-bec
Note: EFG IO PR
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (67)

Published as Lucia Foster & John Haltiwanger & Chad Syverson, 2016. "The Slow Growth of New Plants: Learning about Demand?," Economica, London School of Economics and Political Science, vol. 83(329), pages 91-129, 01.

Downloads: (external link)
http://www.nber.org/papers/w17853.pdf (application/pdf)

Related works:
Journal Article: The Slow Growth of New Plants: Learning about Demand? (2016)
Working Paper: The Slow Growth of New Plants: Learning about Demand? (2012)
Working Paper: The Slow Growth of New Plants: Learning about Demand? (2010)
Working Paper: The Slow Growth of New Plants: Learning about Demand? (2010)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:nbr:nberwo:17853

Ordering information: This working paper can be ordered from
http://www.nber.org/papers/w17853

Access Statistics for this paper

More papers in NBER Working Papers from National Bureau of Economic Research, Inc National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.. Contact information at EDIRC.
Bibliographic data for series maintained by ().