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Revue de l'OFCE

2006/5 (no 97 bis)


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Article précédent Pages 319 - 349 Article suivant



In this paper, we analyse post-entry and pre-exit performance of French manufacturing firms using a dataset covering 14 industries over the period 1990-2002. Our purpose is to shed light on the working of market selection mechanisms within French manufacturing industries. We found that market selection in France rightly operates in favour of more productive firms, but displays some potential inefficiency in selecting more severely new firms compared to mature firms. This claim is based on three results. First, on average, young firms fail to survive when they are faced with a small productivity disadvantage with respect to incumbents. By contrast, mature firms exit the market only when they are confronted by a large, persistent, and increasing productivity gap with their surviving counterparts. Second, we show that successful entrants do not easily catch up to the average size of the industry despite the fact that they exhibit significant TFP and profitability advantages over incumbents. This reveals the existence of barriers to growth for young firms. Thirdly, we show that, on the whole, productivity improvements due to market selection mechanisms within French manufacturing industries are primarily due to market share reallocation across incumbents and that the net entry effect is weak relative to the findings for other industrialised countries.
JEL Classification: D24, L11, L60.


  • entry exit patterns
  • total factor productivity
  • France
  • firm-level data
  • market selection

Plan de l'article

  1. 1 - Introduction
  2. 2 - Literature background
  3. 3 - A comprehensive dataset on French manufacturing firms
    1. 3.1 - Data sources
    2. 3.2 - Entry and exit patterns
    3. 3.3 - Productivity measurement
  4. 4 - Post-entry performance
  5. 5 - Pre-exit performance of mature firms
  6. 6 - Productivity Decomposition
  7. 7 - Conclusion

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