NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

The Slow Growth of New Plants: Learning about Demand?

Lucia Foster, John C. Haltiwanger, Chad Syverson

NBER Working Paper No. 17853
Issued in February 2012
NBER Program(s):   EFG   IO   PR

It is well known that new businesses are typically much smaller than their established industry competitors, and that this size gap closes slowly. We show that even in commodity-like product markets, these patterns do not reflect productivity gaps, but rather differences in demand-side fundamentals. We document and explore patterns in plants’ idiosyncratic demand levels by estimating a dynamic model of plant expansion in the presence of a demand accumulation process (e.g., building a customer base). We find active accumulation driven by plants’ past production decisions quantitatively dominates passive demand accumulation, and that within-firm spillovers affect demand levels but not growth.

You may purchase this paper on-line in .pdf format from SSRN.com ($5) for electronic delivery.

Information about Free Papers

You should expect a free download if you are a subscriber, a corporate associate of the NBER, a journalist, an employee of the U.S. federal government with a ".GOV" domain name, or a resident of nearly any developing country or transition economy.

If you usually get free papers at work/university but do not at home, you can either connect to your work VPN or proxy (if any) or elect to have a link to the paper emailed to your work email address below. The email address must be connected to a subscribing college, university, or other subscribing institution. Gmail and other free email addresses will not have access.

E-mail:

Machine-readable bibliographic record - MARC, RIS, BibTeX

Document Object Identifier (DOI): 10.3386/w17853

Users who downloaded this paper also downloaded these:
Foster, Haltiwanger, and Syverson w11555 Reallocation, Firm Turnover, and Efficiency: Selection on Productivity or Profitability?
Haltiwanger, Jarmin, and Miranda w16300 Who Creates Jobs? Small vs. Large vs. Young
Levitt, List, and Syverson w18017 Toward an Understanding of Learning by Doing: Evidence from an Automobile Assembly Plant
Syverson w15712 What Determines Productivity?
Foster, Haltiwanger, and Krizan Aggregate Productivity Growth. Lessons from Microeconomic Evidence
 
Publications
Activities
Meetings
NBER Videos
Data
People
About

Support
National Bureau of Economic Research, 1050 Massachusetts Ave., Cambridge, MA 02138; 617-868-3900; email: info@nber.org

Contact Us