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This article investigates regional variations in firm formation in Finland between 1989 and 1993, and estimates the effects of regional factors on firm formation utilising panel and cross-sectional data. Panel data evidence shows that the average size of firms and establishments in the subregions tends to explain firm formation in Finland most robustly. Cross-sectional results for Finland and several other countries tend to show that demand growth is also an important factor explaining regional firm formation. Panel data results appear to differ from the cross-sectional ones.JEL classification: R12, C33

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Interdependencies in the Dynamics of Firm Entry and Exit

Nyström

2006

J Ind Compet Trade

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Abstract:This paper investigates the dynamics of firm entry and exit with a focus on differences between industrial sectors. The paper discusses how entry rates in industrial sectors are affected by previous exit and entry rates and how exit rates in industrial sectors are affected by previous entry and exit rates. Economic theory presents two different approaches to how entry and exit of firms are interrelated to each other, the multiplier effect and the competition effect. This paper intends two investigate which force that are the predominant one. The empirical analysis is based on data for 25 Swedish manufacturing industries at the 2-digit SIC-level, for firms with more than five employees during the period 1991-2000. A dynamic panel data approach as suggested by Anderson and Hsio (1981) and Arellano and Bond (1991) are used in estimating the relationships. The empirical results find some evidence of the multiplier effect being the predominant effect explaining entry while competition effects are more important for explaining exit patterns.

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Cited by 13 publications

References 16 publications

On Factors Promoting and Hindering Entry and Exit

On Factors Promoting and Hindering Entry and Exit

Regional variations in firm formation: Panel and cross-section data evidence from Finland

Interdependencies in the Dynamics of Firm Entry and Exit

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