Turbulence in High Growth and Declining Industries

44 Pages Posted: 18 Oct 2007

See all articles by Rui Baptista

Rui Baptista

Brunel Business School, Brunel University; Instituto Superior Tecnico, University of Lisbon

Murat Karaöz

Technical University of Lisbon

Date Written: July 2007

Abstract

We examine turbulence over the product life cycle using the lowest possible level of industry aggregation, allowing for the use of panel data to study the evolution of single product markets. We find that replacement of exiting firms by subsequent entry plays a primary role in generating turbulence in high growth markets, while displacement of incumbents by recent entrants is the main selection force in declining markets. As product life cycles progress, trial-and-error entry subsides, and turbulence decreases.

Keywords: Entry, Exit, Selection, Product life cycle, Replacement, Displacement

JEL Classification: L11

Suggested Citation

Baptista, Rui and Karaöz, Murat, Turbulence in High Growth and Declining Industries (July 2007). Jena Economic Research Paper No. 2007-043, Available at SSRN: https://ssrn.com/abstract=1021203 or http://dx.doi.org/10.2139/ssrn.1021203

Rui Baptista (Contact Author)

Brunel Business School, Brunel University ( email )

Kingston Lane
Eastern Gateway Building
Uxbridge, Middlesex UB8 3PH
United Kingdom
+44 (0)1895 265890 (Phone)

HOME PAGE: http://www.brunel.ac.uk/bbs/people/academic-and-research-staff/full-time-faculty/rui-baptista

Instituto Superior Tecnico, University of Lisbon ( email )

Dep. of Engineering Management
Av. Rovisco Pais
Lisbon, 1049-001
Portugal

HOME PAGE: http://https://fenix.ist.utl.pt/homepage/ist14021?locale=en_EN

Murat Karaöz

Technical University of Lisbon ( email )

R. Miguel Lupi, 20
Lisbon, 1200
Portugal

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