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Production Capacity and Patterns of Exit in Declining Industries

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Authors
Yoo, JinSoo
Issue Date
1992
Publisher
Seoul Journal of Economics
Citation
Seoul Journal of Economics 5 (No. 3 1992): 231-240
Keywords
USITC; cross-sectional data; pattern of exit
Abstract
This paper investigates how production capacities of firms affect the firm behavior in declining industries. An exit model in which firms do not have to operate at full capacity is presented. The result shows that it is the size of firms' operating costs relative to their opportunity costs of capital that determines the patterns of exit in declining industries. It is an interesting result since a larger firm. contrary to the existing literature, can survive longer than a smaller firm when the operating costs dominate the opportunity costs of capital.
ISSN
1225-0279
Language
English
URI
http://hdl.handle.net/10371/955
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College of Social Sciences (사회과학대학)Institute of Economics Research (경제연구소)Seoul Journal of EconomicsSeoul Journal of Economics vol.05(3) (Fall 1992)
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