Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/174136
Authors: 
Savagar, Anthony
Dixon, Huw
Year of Publication: 
2017
Series/Report no.: 
Cardiff Economics Working Papers E2017/8
Abstract: 
Slow firm entry over the business cycle causes measured TFP to vary endogenously because incumbent firms bear shocks. Our main theorem states that imperfect competition and dynamic firm entry are necessary and sufficient conditions for these endogenous productivity fluctuations. The result focuses on the short-run absence of entry and incumbents' output response given this quasi-fixity. Quantitatively we show the endogenous productivity effect is as large as a traditional capital utilization effect.
Subjects: 
dynamic entry
endogenous productivity
endogenous sunk costs
business stealing
business cycle
continuous time
JEL: 
E32
D21
D43
L13
C62
Document Type: 
Working Paper
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