The Evolution of Markets and Entry, Exit and Survival of Firms

TLDR

The study investigates how firm entry, exit, and survival evolve from product introduction to market maturity. Using data on twenty-five new products, the authors construct a complete inventory of entering, exiting, and surviving firms from product birth to market maturity. The analysis shows that entry and exit rates vary systematically with market development stage, while survival rates depend on both market stage and firm characteristics. © 1996 MIT Press.

Abstract

This paper examines entry, exit, and the survival of firms in terms of evolutionary changes in the market from the first introduction of a product to maturity of the market. It is shown that both entry and exit rates depend systematically on the stage of development of the market in the cycle from birth to maturity. Survival rates depend both on stage of development and on individual firm attributes. The empirical work is carried out with data for twenty-five new products. A complete inventory of entering, exiting, and surviving firms from the birth of a new product to its maturity is developed. Copyright 1996 by MIT Press.