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The Slow Growth of New Plants: Learning about Demand?

Lucia Foster (), John Haltiwanger and Chad Syverson

Working Papers from U.S. Census Bureau, Center for Economic Studies

Abstract: It is well known that new businesses are typically much smaller than their established industry competitors, and that this size gap closes slowly. We show that even in commodity-like product markets, these patterns do not reflect productivity gaps, but rather differences in demand-side fundamentals. We document and explore patterns in plants’ idiosyncratic demand levels by estimating a dynamic model of plant expansion in the presence of a demand accumulation process (e.g., building a customer base). We find active accumulation driven by plants’ past production decisions quantitatively dominates passive demand accumulation, and that within-firm spillovers affect demand levels but not growth.

New Economics Papers: this item is included in nep-bec
Date: 2012-03
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https://www2.census.gov/ces/wp/2012/CES-WP-12-06.pdf First version, 2012 (application/pdf)

Related works:
Journal Article: The Slow Growth of New Plants: Learning about Demand? (2016) Downloads
Working Paper: The Slow Growth of New Plants: Learning about Demand? (2012) Downloads
Working Paper: The Slow Growth of New Plants: Learning about Demand? (2010) Downloads
Working Paper: The Slow Growth of New Plants: Learning about Demand? (2010) Downloads
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Persistent link: https://EconPapers.repec.org/RePEc:cen:wpaper:12-06

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