Working Paper: CEPR ID: DP2650
Authors: Paul A. Geroski; Mariana Mazzucato
Abstract: This Paper examines four models that might be used to account for variations in the number of producers who operate in a particular market over the lifetime of that market. Two of these are standard economics textbook models, one is a non-standard model and one is a textbook model derived from the literature on organizational ecology. The four models have several observable differences and this opens up the possibility of testing any one against the others. We apply these four models to 93 years of data on the population of domestic car producers in the US car industry. The salient feature of this population is the very large rise and fall in the number of firms operating in the very early years of the industry, a phenomena which seems hard to account for using any of the three textbook models that we consider here.
Keywords: Organizational Ecology; Industry Populations; Market Size; Industrial Economics
JEL Codes: L10; L60
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Market Size (L25) | Number of Firms (D21) |
| High Profits (D33) | Entry of Firms (L26) |
| Entry of Firms (L26) | Decrease in Profits (D33) |
| Speculative Bubbles (E32) | Entry and Exit of Firms (D21) |
| Population Density (J11) | Population Growth Rates (J11) |