The life cycle of a competitive industry

B. Jovanovic, G. M. Macdonald

    Research output: Contribution to journalArticlepeer-review


    Firm numbers first rise, then later fall, as an industry evolves. This nonmonotonicity is explained using a competitive model in which innovation opportunities fuel entry and relative failure to innovate prompts exit; equilibrium time paths for price and quantity also share features of the data. The model is estimated using data from the US automobile tire industry, a particularly dramatic example of the nonmonotonicity in firm numbers. -Authors

    Original languageEnglish (US)
    Pages (from-to)322-347
    Number of pages26
    JournalJournal of Political Economy
    Issue number2
    StatePublished - 1994

    ASJC Scopus subject areas

    • Economics and Econometrics


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