The determinants of firm exit in the French food industries

A semi-parametric approach is used to estimate firm propensity to exit. The unobserved individual productivity of a firm is first estimated using the Ackerberg et al. (2006) approach and then introduced as a determinant of firm exit in conjunction with other variables that may serve as barriers to exit, including the firm’s level of sunk costs and the industry concentration. Using an unbalanced panel of data for 5,849 firms in French food industries from 1996 to 2002, we find a significantly negative relationship between a firm’s probability to exit and its individual efficiency and age. In addition to validating these well-known results, we also show that the level of sunk costs may be an important barrier to exit. Ultimately, the relationship between the propensity to exit and the industry level of concentration contains a turning point: the relationship is at first increasing but then becomes decreasing.


Subject(s):
Issue Date:
2012
Publication Type:
Journal Article
PURL Identifier:
http://purl.umn.edu/188225
Published in:
Review of Agricultural and Environmental Studies - Revue d'Etudes en Agriculture et Environnement (RAEStud), Volume 93, Issue 2
Page range:
193-212

Fulltext:
Download fulltext
PDF

Rate this document:

Rate this document:
1
2
3
 
(Not yet reviewed)