The Pre-Producers

Boyan Jovanovic ()

No 91, 2004 Meeting Papers from Society for Economic Dynamics

Abstract: While a start-up firm waits for its sales to materialize, it is a "pre-producer". This waiting period represents a special kind of entry cost. This paper studies how such entry costs influence the several stages of an industry's life cycle. Assuming that the production hazard is rising in the initial stages of pre-production, industry equilibrium entails an eventual "shakeout" of pre-producers as they are squeezed out by the producers who drive industry price down. This seems to fit the experience of the early automobile industry and of the recent dot.com wave

Keywords: Exit; hazard rates; learning curves (search for similar items in EconPapers)
JEL-codes: L11 (search for similar items in EconPapers)
Date: 2004
New Economics Papers: this item is included in nep-dge and nep-ent
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Citations: View citations in EconPapers (2)

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