TY - JOUR AU - Dunne,Timothy AU - Klimek,Shawn D. AU - Roberts,Mark J. TI - Entrant Experience and Plant Exit JF - National Bureau of Economic Research Working Paper Series VL - No. 10133 PY - 2003 Y2 - December 2003 UR - http://www.nber.org/papers/w10133 L1 - http://www.nber.org/papers/w10133.pdf N1 - Author contact info: Timothy Dunne Department of Economics Hester Hall University of Oklahoma Norman, OK 73019 Tel: 405 325 2863 E-Mail: tim.dunne@clev.frb.org Shawn D. Klimek Center for Economic Studies U.S. Census Bureau 4600 Silver Hill Rd Washington, DC 20233 Tel: (301) 763-2861 Fax: (301) 763-5935 E-Mail: shawn.d.klimek@census.gov Mark J. Roberts Department of Economics 513 Kern Graduate Building Pennsylvania State University University Park, PA 16802 Tel: 814/863-1535 Fax: 814/863-4775 E-Mail: mroberts@psu.edu AB - Producers entering a market can differ widely in their prior production experience, ranging from none to extensive experience in related geographic or product markets. In this paper, we quantify the nature of prior plant and firm experience for entrants into a market and measure its effect on the plant's decision to exit the market. Using plant-level data for seven regional manufacturing industries in the U.S., we find that a producer's experience at the time it enters a market plays an important role in the subsequent exit decision, affecting both the overall probability of exit and the method of exit. After controlling for observable plant and market profit determinants, there remain systematic differences in failure patterns across three groups of plants distinguished by their prior experience: de novo entrants, experienced plants that enter by diversifying their product mix, and new plants owned by experienced firms. The results indicate that the exit decision cannot be treated as determined solely by current and future plant, firm, and market conditions, but that the plant's history plays an important independent role in conditioning the likelihood of survival. ER -