What Drives Market Structure? On the Relation between Firm Demographic Processes, Firms' Innovative Behaviour and Market Structure

29 Pages Posted: 27 Oct 2003

See all articles by Emmanuelle Fauchart

Emmanuelle Fauchart

Conservatoire des Arts et Metiers (CNAM)

Max Keilbach

Max Planck Society for the Advancement of the Sciences - Max Planck Institute for Economics

Abstract

In this paper we suggest an structural model that specifies firm growth as a function of firm specific parameters and of competition for purchase power with other firms on a given market. Moreover, we explicitely model firms' innovative behaviour and distinguish between different innovation regimes. On the basis of a set of simulations of this model we derive a number of empirically testable hypotheses. A subset of these have already found support in the empirical literature. We take these as evidence in favour of the explanatory power of the model. In addition, we are able to derive further testable propositions on the interaction of firm-demographic processes, innovative behaviour and market structure that go beyond the existing literature and that we suggest for further research. We conclude that the approach chosen here provides a fruitful pathway for further research.

Keywords: Firm size distribution, innovation regime, technological regime, industrial dynamics, firm demography, carrying capacity, market concentration, rank order turbulence

JEL Classification: L60, O30, G30

Suggested Citation

Fauchart, Emmanuelle and Keilbach, Max, What Drives Market Structure? On the Relation between Firm Demographic Processes, Firms' Innovative Behaviour and Market Structure. ZEW Discussion Paper No. 02-77, Available at SSRN: https://ssrn.com/abstract=441706 or http://dx.doi.org/10.2139/ssrn.441706

Emmanuelle Fauchart

Conservatoire des Arts et Metiers (CNAM) ( email )

292, rue Saint-Martin
Paris cedex 03, 75141
France

Max Keilbach (Contact Author)

Max Planck Society for the Advancement of the Sciences - Max Planck Institute for Economics ( email )

Kahlaische Strasse 10
D-07745 Jena, 07745
Germany
+49 - 3641 - 68 67 70 (Phone)
+49 - 3641 - 68 67 10 (Fax)

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