Survival of Firms and Plants in a Supply-Constrained Industry

Posted: 23 May 2008

See all articles by Anthony B. Lawrance

Anthony B. Lawrance

University of NSW - Finance and Accounting

Robert E. Marks

UNSW Australia Business School, School of Economics

Date Written: 24 November 2006

Abstract

We analyze duration of firms in a supply-constrained industry - the Australian blackcoal industry - using our thirty-two-year database. We test the hypothesis that the exhaustion of coal reserves of individual mines (their plants) will be reflected in the firm's duration, and find negative duration dependence with the age of the firm. In contrast to the results from studies of manufacturing industries, we find no relationship between firm size and survival. For individual mines (plants) we find no dependence with age but positive dependence with size - the larger the mine, the longer it survives. We find that the exit of firms is driven by the depletion of their reserves, and by the entry of new firms seeking the supply-constrained resource.

Keywords: duration, Cox regression, firm, plant, size, survival, supply-constraint, coal.

JEL Classification: C41, L71

Suggested Citation

Lawrance, Anthony B. and Marks, Robert E., Survival of Firms and Plants in a Supply-Constrained Industry (24 November 2006). Available at SSRN: https://ssrn.com/abstract=1136042

Anthony B. Lawrance

University of NSW - Finance and Accounting ( email )

Sydney, NSW 2052
Australia

Robert E. Marks (Contact Author)

UNSW Australia Business School, School of Economics ( email )

High Street
Sydney, NSW 2052
Australia
+61 2 9931 9271 (Phone)

HOME PAGE: http://www.agsm.edu.au/bobm

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