Entry, Exit and Investment-Specific Technical Change, Second Version

Roberto Samaniego ()

PIER Working Paper Archive from Penn Institute for Economic Research, Department of Economics, University of Pennsylvania

Abstract: Using European data, this paper finds that (1) industry entry and exit rates are positively related to industry rates of investment-specific technical change (ISTC); (2) 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 (1) and (2), provided the cost of technology adoption is increasing in the rate of ISTC.

Keywords: Entry; exit; turnover; investment-specific technical change; entry costs; vintage capital; embodied technical change; lumpy investment (search for similar items in EconPapers)
JEL-codes: D92 L26 O33 O41 (search for similar items in EconPapers)
Pages: 39 pages
Date: 2008-04-02, Revised 2008-12-08
New Economics Papers: this item is included in nep-bec, nep-dge, nep-ent and nep-tid
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Persistent link: https://EconPapers.repec.org/RePEc:pen:papers:09-020

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