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The Slow Growth of New Plants: Learning about Demand?

Lucia Foster (), John Haltiwanger and Chad Syverson

No 17853, NBER Working Papers from National Bureau of Economic Research, Inc

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.

JEL-codes: D2 E23 L1 L6 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-bec
Date: 2012-02
Note: EFG IO PR
References: View complete reference list from CitEc
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Published as Lucia Foster & John Haltiwanger & Chad Syverson, 2016. "The Slow Growth of New Plants: Learning about Demand?," Economica, London School of Economics and Political Science, vol. 83(329), pages 91-129, 01.

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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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