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The Life Cycle of a Competitive Industry

Boyan Jovanovic () and Glenn MacDonald ()

Journal of Political Economy, 1994, vol. 102, issue 2, 322-47

Abstract: Firm numbers first rise, then later fall, as an industry evolves. This nonmonotonicity is explained using a competitive model in which innovation opportunities fuel entry and relative failure to innovate prompts exit; equilibrium time paths for price and quantity also share features of the data. The model is estimated using data from the U.S. automobile tire industry, a particularly dramatic example of the nonmonotonicity in firm numbers. Copyright 1994 by University of Chicago Press.

Date: 1994
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Related works:
Working Paper: The Life Cycle of a Competitive Industry (1993)
Working Paper: The Life-Cycle of a Competitive Industry (1993) Downloads
Working Paper: The Life-Cycle of Competitive Industry (1992)
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