Firm Entry, Productivity Differentials and Turnovers in Import Substituting Markets: A study of the petrochemical industry in Colombia

Luis Gutiérrez and Carlos Pombo

No 22, Econometric Society 2004 Latin American Meetings from Econometric Society

Abstract: This paper analyses plant entry, total factor productivity growth, average productivity level differentials and turnovers across Colombia's petrochemical industry for the 1974-1998 period. Results show that successful entrants shaped industry productivity and induced plant restructuring among incumbent plants. There is consistent plant heterogeneity across plant cohorts as well as across sub-markets within petrochemicals. Entry flows were steady increasing within plastics regardless of trade policy regimes. Survival rates are remarkably high and consistent over time in medium-size plants meaning that entrants adopted competitive post-entry strategies. Total factor productivity growth decomposition shows that the incumbent effect dominates the turnover effect. Market share reallocation among continuing plants constitutes an important source of productivity growth. Econometric results suggest that barriers to entry associated with plant technology licensing and dependence of imported raw materials deter entry while complementary market variables such as industry productivity levels, growth in housing construction, and fringe competition induce firm entry.

Keywords: Entry; Turnover; Total Factor Productivity; Petrochemical Industry (search for similar items in EconPapers)
JEL-codes: D24 O12 O47 (search for similar items in EconPapers)
Date: 2004-08-11
New Economics Papers: this item is included in nep-com and nep-ent
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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Working Paper: Firm entry, productivity differentials and turnovers in import substituting markets: a study of the petrochemical industry in Colombia (2004)
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Persistent link: https://EconPapers.repec.org/RePEc:ecm:latm04:22

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