The Determinants of and Interaction between Entry and Exit in Taiwan's Manufacturing

The Determinants of and Interaction between Entry and Exit in Taiwan's Manufacturing Based upon substantial high firm turnover rates, various policy incentives, and developed subcontracting-networks, this paper investigates structure and firm-specific factors that determine the entry and exit rate across industries. The interaction between entry and exit rates of the industry is incorporated in the study, namely the "displacement", "replacement" and "instantaneous causal" effects. The regression results indicate that entry and exit rates are determined by different measures of entry or exit barriers but the effects are not fully symmetric. It is also evident that underlying entry or exit sunk- costs introduced the instantaneous movement of entry and exit rates. In addition, the entry of new plants has a moderate effect to facilitate the displacement or market selection process to displace the inefficient producers but no significant replacement effect is found. The policy implication being that the government support encourages entry it also increases the industry failure rates. Small Business Economics Springer Journals

The Determinants of and Interaction between Entry and Exit in Taiwan's Manufacturing

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Kluwer Academic Publishers
Copyright © 2003 by Kluwer Academic Publishers
Business and Management; Management; Microeconomics; Entrepreneurship; Industrial Organization
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