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The Slow Growth of New Plants: Learning about Demand? / Lucia Foster, John C. Haltiwanger, Chad Syverson.
- Format:
- Book
- Author/Creator:
- Foster, Lucia.
- Series:
- Working Paper Series (National Bureau of Economic Research) no. w17853.
- NBER working paper series no. w17853
- Language:
- English
- Physical Description:
- 1 online resource: illustrations (black and white);
- Place of Publication:
- Cambridge, Mass. National Bureau of Economic Research 2012.
- Summary:
- 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.
- Notes:
- Print version record
- February 2012.
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