The determinants of firm exit in the French food industries

Pierre Blanchard, Jean-Pierre Huiban and Claude Mathieu
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Pierre Blanchard: Université Paris Est, ERUDITE, Université Paris Est Créteil, 94010 Créteil, France

Review of Agricultural and Environmental Studies - Revue d'Etudes en Agriculture et Environnement, 2012, vol. 93, issue 2, 193-212

Abstract: A semi-parametric approach is used to estimate firm propensity to exit. The unobserved individual productivity of a firm is first estimated using the Ackerberg et al. (2006) approach and then introduced as a determinant of firm exit in conjunction with other variables that may serve as barriers to exit, including the firm’s level of sunk costs and the industry concentration. Using an unbalanced panel of data for 5,849 firms in French food industries from 1996 to 2002, we find a significantly negative relationship between a firm’s probability to exit and its individual efficiency and age. In addition to validating these well-known results, we also show that the level of sunk costs may be an important barrier to exit. Ultimately, the relationship between the propensity to exit and the industry level of concentration contains a turning point: the relationship is at first increasing but then becomes decreasing.

Keywords: firm; productivity; sunk costs; exit; concentration; food industries (search for similar items in EconPapers)
JEL-codes: C33 D24 L25 L66 (search for similar items in EconPapers)
Date: 2012
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Citations: View citations in EconPapers (21)

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Related works:
Journal Article: The determinants of firm exit in the French food industries (2012)
Journal Article: The determinants of firm exit in the French food industries (2012)
Working Paper: The determinants of firm exit in the French food industries (2012)
Working Paper: The determinants of firm exit in the French food industries (2012)
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Persistent link: https://EconPapers.repec.org/RePEc:rae:jourae:v:93:y:2012:i:2:p:193-212

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