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Cited by 2,857Firm Innovation and GrowthMerger and Competition AnalysisEconomic theories and models

Entry, Exit, and firm Dynamics in Long Run Equilibrium

Hopenhayn, Hugo A.·1992·Econometrica
DOI 10.2307/2951541
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Abstract

A dynamic stochastic model for a competitive industry is developed in which entry, exit, and the growth of firms' output and employment is determined. The paper extends long-run industry equilibrium theory to account for entry, exit, and heterogeneity in the size and growth rate of firms. Conditions under which there is entry and exit in the long run are developed. Cross sectional implications and distributions of profits and value of firms are derived. Comparative statics on the equilibrium size distribution and turnover rates are analyzed. Copyright 1992 by The Econometric Society.

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  • The model is consistent with the existence of internal economies of scale at the firm level, provided that there is free entry in the production of each good.

    “As we have already noted, our model is consistent with the existence of internal economies of scale at the firm-level, provided that there is free entry in the production of each good, as in Hopenhayn (1992) and Appendix A.1.”

    From The Textbook Case for Industrial Policy: Theory Meets Data (2019) · cites this paper as Hopenhayn (1992)

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Authors
Hopenhayn, H. A.
Corresponding author
Hopenhayn, Hugo A.
Venue
Econometrica
Publisher
JSTOR
Published
1992-09
Volume
60
Issue
5
Pages
1127
ISSN
0012-9682 (ISSN-L)
DOI
10.2307/2951541
OpenAlex
W2017299421
Cited by
2,857
References
0
Citations by year
2026: 113 · 2025: 107 · 2024: 90 · 2023: 110 · 2022: 90 · 2021: 126 · 2020: 117 · 2019: 122 · 2018: 112 · 2017: 121 · 2016: 98 · 2015: 123 · 2014: 143 · 2013: 152 · 2012: 141
FWCI
19.25
Type
journal article
Language
en
Open access
closed
Locations
  • Econometrica (publishedVersion)
  • RePEc: Research Papers in Economics (submittedVersion)
Topics
  • Social Sciences › Economics, Econometrics and Finance › Economics and Econometrics › Firm Innovation and Growth
  • Social Sciences › Economics, Econometrics and Finance › Economics and Econometrics › Merger and Competition Analysis
  • Social Sciences › Economics, Econometrics and Finance › Economics and Econometrics › Economic theories and models
Keywords
firm entry, firm exit, firm dynamics, firm size distribution, business growth, job creation, firm heterogeneity, profit distribution, turnover rate, competitive industries, comparative statics

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