Zombie Firms and Competition

Francesco Androni (), Gran Sasso Science Institute Ascani () and Gran Sasso Science Institute Marzucchi ()
Additional contact information
Francesco Androni: Gran Sasso Science Institute
Gran Sasso Science Institute Ascani: Gran Sasso Science Institute
Gran Sasso Science Institute Marzucchi: Gran Sasso Science Institute

No 2025-03, Discussion Paper series in Regional Science & Economic Geography from Gran Sasso Science Institute, Social Sciences

Abstract: The phenomenon of zombie firms has been increasing through time in the last decades. Prior re search has extensively examined the role of zombie firms in credit misallocation and weak insolvency regimes However, limited attention is paid to how the competitive environment has influenced its surge. The study aims at linking the diffusion of zombie formation with the field of industrial dynam ics. The analysis focuses on whether the intensity of competition influences the diffusion of zombie f irms, by assessing competition forces such as firm entry and innovation intensity. We use micro aggregated data at the region-sector level to analyse the diffusion of zombie firms in Italy for the years from 2014 to 2020, and identify a substantive role of reallocation forces in driving the shares of zombie firms. Competition in the form of entry and, albeit more weakly, innovation intensity reduces the diffusion of zombie firms, ultimately showing that a decrease in competition intensity is part of the phenomenon. This research contributes to understanding the relationship between zombie firms and sluggish economic activity, describing further factors that affect their formation and persistence.

Keywords: Zombie firms; competition; firm entry; innovation; industrial dynamics (search for similar items in EconPapers)
JEL-codes: L25 O31 O33 R11 (search for similar items in EconPapers)
Pages: 33 pages
Date: 2025-02, Revised 2025-02
New Economics Papers: this item is included in nep-com, nep-cse, nep-ent and nep-sbm
References: Add references at CitEc
Citations:

Downloads: (external link)
https://www.gssi.it/images/discussion%20papers%20rseg/2025/DPRSEG_2025-03.pdf First version, 2020 (application/pdf)

Related works:
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:ahy:wpaper:wp65

Access Statistics for this paper

More papers in Discussion Paper series in Regional Science & Economic Geography from Gran Sasso Science Institute, Social Sciences Contact information at EDIRC.
Bibliographic data for series maintained by Andrea Ascani ().