The Evolution of Markets and Entry, Exit and Survival of Firms

Rajshree Agarwal and Michael Gort

The Review of Economics and Statistics, 1996, vol. 78, issue 3, 489-98

Abstract: This paper examines entry, exit, and the survival of firms in terms of evolutionary changes in the market from the first introduction of a product to maturity of the market. It is shown that both entry and exit rates depend systematically on the stage of development of the market in the cycle from birth to maturity. Survival rates depend both on stage of development and on individual firm attributes. The empirical work is carried out with data for twenty-five new products. A complete inventory of entering, exiting, and surviving firms from the birth of a new product to its maturity is developed. Copyright 1996 by MIT Press.

Date: 1996
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