Entry, exit and market structure in a changing climate
Filippo Natoli () and
MPRA Paper from University Library of Munich, Germany
Climate change has long run effects on the size and composition of a country's corporate sector. Using administrative data on the universe of Italian firms, we find that an increase in the incidence of very hot days over a multiyear period persistently reduces the growth rate of active firms in the market. This is due to a drop in firm entry and an increase in firm exit, with relocation playing a minor role. A firm-level investigation reveals a dichotomy between smaller firms, which suffer from high temperatures, and larger firms that successfully adapt, increasing production and net revenues. According to an average climatic scenario, the projected evolution of local temperatures will impact corporate demography further, also exacerbating the divergent effects across warmer and colder areas over the current decade.
Keywords: climate change; temperatures; firm dynamics (search for similar items in EconPapers)
JEL-codes: D22 Q54 R12 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-bec, nep-com, nep-ent, nep-env, nep-sbm and nep-tid
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